COMPREHENSIVE ANNUAL FINANCIAL REPORT

Transcription

1 YUIMA MUNICIPAL WATER DISTRICT COMPREHENSIVE ANNUAL FINANCIAL REPORT for the fiscal year ended June 30, 2015 Pauma Valley, California

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3 COMPREHENSIVE ANNUAL FINANCIAL REPORT Fiscal Year Ended June 30, 2015 Prepared by the Finance Department Yuima Municipal Water District Pauma Valley, California

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5 OUR MISSION AND VISION V W.D. Bill Knutson President Ron W. Watkins Vice-President George Stockton Secretary/Treasurer Mike Fitzsimmons Director Lynne Laney Villalobos Director Yuima Municipal Water District iss committed to providing a diversified, sustainable water supply for water service to our Pauma Valley customers that exceeds all standards of quality and reliability at fair, reasonab ble and equitable rates. We hope to be known and respected in our community as good stewards of public resources and the responsibilities entrusted to us. Linden A. Burzell General Manager Lori A. Johnson Director of Finance Todd Engstrand Director of O& &M & Engineering Allen Simon Sr. Systems Tech Mark Quinn Water Systems Tech II Robert M. Davis Water Systems Tech II Jolynn Duff CustomerService/ Accounting Tech Matthew Munaco Water Systems Tech II Amy Reeh Accountan

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7 Comprehensive Annual Financial Report Year Ended June 30, 2015 TABLE OF CONTENTS I. INTRODUCTORY SECTION Letter of Transmittal Organizational Chart Principal Officials Government Finance Officers Association Certificate of Achievement PAGE i - vii viii ix x II. FINANCIAL SECTION Independent Auditors Report 1-2 Management s Discussion and Analysis 3-11 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position 12 Statement of Activities Fund Financial Statements: Balance Sheet - Governmental Fund 15 Statement of Revenues, Expenditures and Changes in Fund Balance - Governmental Fund 16 Statement of Net Position - Proprietary Fund Statement of Revenues, Expenses and Changes in Net Position - Proprietary Fund 19 Statement of Cash Flows - Proprietary Fund 20 Notes to Financial Statements Required Supplementary Information: Schedule of the District s Proportionate Share of the Net Pension Liability CalPERS Miscellaneous Pension Plan 49 Schedule of Contributions CalPERS Miscellaneous Pension Plan 50 Schedule of Funding Progress for OPEB 51 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - Governmental Fund Type - Fire Protection 52 Notes to Required Supplementary Information 53 III. STATISTICAL SECTION Net Position by Component Changes in Net Position Fund Balances of Governmental Funds 58 Changes in Fund Balance of Governmental Fund Commodity Charges and Base Charges 61 Water Sold by Type of Customer 62 Water Purchased and Produced 63 Principal Water Consumers 64

8 Comprehensive Annual Financial Report Year Ended June 30, 2015 TABLE OF CONTENTS - CONTINUED PAGE STATISTICAL SECTION - Continued Property Tax and Assessment Levies 65 Assessed Value of Taxable Property 66 Ratios of Outstanding Debt by Type 67 Revenue Debt Coverage Computation of Direct and Overlapping Debt 70 San Diego County Demographic and Economic Statistics 71 San Diego County Employment by Industry 72 San Diego County Principal Employers 73 District Employees and Operational Information 74 Capital Assets Operating and Capital Indicators 77-78

9 Board of Directors W.D. "Bill" Knutson- President Ron W. Watkins - Vice President Terry Yasutake - Secretary/Treasurer Michael Fitzsimmons - Director Laney Villalobos - Director General Manager Lori A. Johnson ~Cl..J MUNICIPAL WATER DISTRICT P.O. Box Valley Center Road Pauma Valley, CA Tel: (760) Fax: (760) Website: Counsel Jeffery G. Scott December 23, Honorable Board of Directors Yuima Municipal Water District Valley Center Road Pauma Valley, CA We are pleased to present the Yuima Municipal Water District's ("District") Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, The purpose of the report is to provide the board, citizens, creditors, investors, and other interested parties with reliable fmancial information about the District. This report was prepared by the District's Finance Department., following the guidelines set forth by the Government Accounting Standards Board (GASB) and in accordance with Generally Accepted Accounting Principles (GAAP). Responsibility for both the accuracy of the data presented, and the completeness and fairness of the presentation, including all disclosures, rests with District management. We believe the data, as presented, is accurate in all material respects and that it is presented in a manner that provides a fair representation of the fmancial position and results of operation of the District and includes all disclosures necessary to enable readers to gain the maximum understanding of the District's fmancial activity. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic fmancial statements in the form of a Management's Discussion and Analysis (MD&A), which should be read in conjunction with this report. The District's MD&A can be found immediately following the Independent Auditors' Report. The District's fmancial statements have been audited by Teaman, Ramirez and Smith Inc., a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the fmancial statements of the District for the fiscal year ended June 30, 2015, are free of material misstatements. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement, assessing the accounting principles used and significant estimates made by management, as well as evaluating overall fmancial statements presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified ("clean") opinion and that the District's fmancial statements for the fiscal year ended June 30, 2015, are fairly presented in conformity with GAAP. The independent auditor's report is presented as the first component of the fmancial section of this report. We are very proud of the results we have achieved in , which are presented throughout the pages of this report. The hard work and commitment of our Board, management, and every staff member at Yuima is reflected in the information included here. We encourage you to review the information presented in this report. DISTRICT FORMATION, ORGANIZATION AND HISTORY The District is a governmental corporation governed by a publically elected, five member, Board of Directors. The District was incorporated on January 19, 1963 as a California special district by the State Legislature, with an entitlement to import. water under the provisions of the California Municipal Water District Act of 1911, section et.seq. of the California Water Code as amended. The District was formed for the purpose of importing Colorado River water to augment local water supplies. Prior to the District's formation, the sole source of water was local ground water on the alluvial fan and the San Luis Rey River basin. Following a period of drought extending back to 1949, coupled with increased agricultural water demands, the water table fell drastically and overdrafts of the underlying water basin lowered the basin's level as much as 85 feet, forcing the abandonment of some wells and giving rise to increased pumping costs. This condition also prompted the filing of the Strub vs. Palomar Mutual Water Company suit to which the District is successor in interest and which limits the withdrawal of water for use within the boundaries of Improvement District "A" (IDA) from the San Luis Rey River upstream of Cole Grade Road to no more than 1,350 acre feet annually.

10 Yuima, as successor in interest to Palomar Mutual continues to operate the former Palomar Mutual system and properties (now known as Improvement District A) as an independent water system. Yuima is responsible for administering IDA's compliance with Strub et al., which however does not, in the opinion of District Counsel, affect or bind the 70% of the District which is outside of IDA and which operates under a separate system permit. The District s ordinances, policies, taxes, and rates for service are set by the five-member Board of Directors, who are elected by voters in their respective geographic divisions, to serve staggered four-year terms on its Governing Board. The Board of Directors (Board) governs the District. The Board manages the District through an appointed general manager. The District's management team also includes two department heads who oversee the Administrative & Finance and Operations & Engineering Departments. There are currently 9 full-time employees working for the District. The financial data presented herein includes information for activities and entities that are significantly controlled by the District and for which the Board is primarily financially accountable. THE REPORTING ENTITY AND ITS SERVICES The District is a revenue neutral public agency, meaning that rates are set based on projections so that each end-user pays his or her fair share of the District s costs of water acquisition, operation and maintenance, betterment, renewal and replacement of the public water facilities. The district is an Enterprise district, in that operations are financed and operated in a manner similar to private business enterprises where the intent is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis is to be financed or recovered primarily through user charges; or where periodic determination of revenues earned, expenses incurred, and/or net income is deemed appropriate for capital maintenance, public policy, management control, accountability, or other purposes. Since the District is in the business of selling water and rendering services to an end user, it is required by the State of California to follow the enterprise type of fund accounting. All proprietary funds are accounted for on a cost of services or capital maintenance measurement focus. This means that all assets, all deferred inflows/outflows of resources, and all liabilities (whether current, non-current or restricted) associated with the activity are included in the balance sheet. The District provides water and fire protection services. The District has established and maintains various self-balancing groups of accounts in order to enhance internal control and to further the attainment of other management objectives. These groups of accounts, which are funds and sub-funds of the reporting entity, are identified in the District s books and records as: General Fund Improvement District A Fund Fire Fund The General Fund accounts for all activity related to water operations as well as the general operations of the District s water operations. Improvement District A Fund accounts for water operations, capital assets, and construction-in-progress transactions related exclusively to that geographically defined area. The Fire Fund acts as a pass-through mechanism for revenues collected on behalf of the California Department of Forestry and Fire Protection (CalFire), to fund the fire protection operations. CURRENT ECONOMIC CONDITIONS AND OUTLOOK While the current economic recovery is slow but steady, many sectors of the economy are improving. Home values are rising significantly with a 6.4% increase from 2014 and further increase on the horizon. Although credit conditions continue to improve, consumer confidence remains unstable with more declines, rather than increases, over the last months of the fiscal year. While the San Diego County labor market continues to improve, the job growth is not as significant as in past years; reporting only a 1.1% reduction in unemployment and zero job growth within the construction industry between June 2014 and June However, the State of California reported a 7% job growth increase in the construction industry for the same time frame. ii

11 Weather conditions (the worst being the drought), as well as sustained reduction in water demand impact the District water sales more than the local economic conditions. Although the statewide drought continues to be a concern with four consecutive years of dry conditions plaguing our state; forecasters are predicting El Nino conditions for the winter of 2015/2016. Today, up to 80% of the San Diego region s water is imported from the Colorado River and Northern California. The San Diego County Water Authority (SDCWA), as the regional water supplier, does not anticipate water shortages for San Diego County in 2016 due to the new water supply reliability projects and adequate water reduction usage programs that have been implemented over the past several years. These programs include, but are not limited to, the construction of additional water storage in Southern California and the purchase of drought-proof water supplies from nation s largest desalination plant located in Carlsbad. This plant is expected to bring desalinated water online in In addition to these water saving efforts Governor Jerry Brown ordered statewide water restrictions to facilitate a 25% reduction in potable urban water use throughout the state. Over the last 52 years, the District has grown to be a strong agricultural community. Today the District serves a population of 1,336 through 330 service connections provided within approximately 21 square miles of northern San Diego County. The District operates 42.1 miles of water main, 27 productive wells, 10 potable water tanks, and 2 Ag only reservoirs. It appears unlikely that population growth will be a significant factor within the next five years. No major housing developments are planned, and even if a project were initiated today, it would take at least five years to obtain the appropriate zoning changes and complete construction. It is estimated that population growth will not exceed 0.5% per year over the next five years. Considering that only about 2% of total District demand is residential, the increase in population growth is expected to be negligible with respect to overall water demand during the next few years. In fiscal year the District purchased approximately 62.3% of its water from the San Diego County Water Authority (SDCWA or the Authority ) and 1.35% of its water from local water agreements, at a cost of $7.1 million, or 61% of the District s operating expenses. The Authority imports most of its water from the Metropolitan Water District of Southern California (Met). For the fiscal year ended June 30, 2015, the District billed 330 customers for 7,176 acre feet of water, representing a 5.5% decrease in sales from the prior fiscal year. Water sales for the past ten years have ranged from 4,974 to 7,591 acre feet. Because a large portion of our sales are to agriculture, sales are greatly affected by weather conditions, making sales projections difficult. In fiscal year the Pauma Valley area received inches of rainfall. The effects of the extended drought have resulted in a loss of local groundwater, contributing to the increase in the amount of purchased water. However, the Governor s executive order mandating water cutbacks has reduced the amount of total sales for the fiscal year. Total system demand is anticipated to be driven by irrigated agriculture which is estimated to constitute in excess of 82% of all water delivered. Our agricultural customers purchased 82% of the District's total water sales in fiscal year while Wholesale and Domestic sales make up the remaining 18% As water is one of the largest production costs for farmers in San Diego County, rapidly increasing wholesale water rates have the potential to severely affect the profitability of agriculture. The impact of these increases on the District s customers has been mitigated to a significant extent by the District s aggressive efforts to develop new sources of lower cost local groundwater. The significant price increases for imported water along with the fluctuating decreases in water sales have made it difficult to project long-term sales demand forecasts. San Diego County Water Authority (SDCWA), the District s water wholesaler, entered into a water purchase agreement with Poseidon to purchase seawater from Poseidon s plant in Carlsbad, California. SDCWA is incorporating seawater desalination into its diversified water supply portfolio and expects seawater desalination to meet 7% of the San Diego region s water demand in Domestic 2% Wholesale 16% Water Sales Agricultural 82% iii

12 LONG-TERM FINANCIAL PLANNING The coming years will be challenging times for everyone in the water industry. Uncertainties concerning Bay-Delta conveyance, new surface storage, the effects of climate change, court decisions affecting both supply and cost, and public environmental policies all contribute to a difficult planning environment in which the cost of imported water is all but certain to increase. Water shortages, both natural and man-made, are possible. These factors have the potential to adversely impact the finances of the District, and staff continues to work diligently to improve operating efficiencies and to cut costs in order to minimize the associated financial risks. Among the most critical policies adopted by the Board is the mandate to increase local supply, thereby decreasing the District s dependence on imported water. ACCOMPLISHMENTS IN FISCAL YEAR After several high profile projects in prior fiscal years the year focused on the maintenance of current infrastructure with a specific focus on securing district properties. The Operations and Maintenance department worked diligently to accomplish these time consuming but necessary goals. District staff assessed property boundaries, determined encroachments, and cleared district easements; clearing 29,928 feet of Mainline easements in the process. After the successful elimination of encroachments on District property, these properties were secured with fencing to ensure the continued safe guarding of District assets and further our commitment to public safety. FINANCIAL INFORMATION AND INTERNAL CONTROLS INTERNAL CONTROLS District management is responsible for establishing and maintaining a system of internal controls designed to ensure that the District s assets are protected from loss, theft, or misuse, and to ensure that adequate accounting data is compiled to allow for the presentation of its Financial Statements in conformity with generally accepted accounting principles. Internal controls are designed to provide reasonable assurance that these objectives are met as effectively as possible. The concept of reasonable assurance recognizes that the cost of maintaining the system of internal controls should not exceed benefits likely to be derived, and that the evaluation of costs and benefits requires estimates and judgments by management. All internal control evaluations occur within the above framework. Management believes that activities presented within this report comply with financial, legal, and contractual obligations, as prudent fiduciary responsibility requires. In addition, we believe that the District s internal accounting controls adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions. During the year, additional internal control improvements to the accounting software have been made, and we continue to identify ways in which we can strengthen our procedures. ACCOUNTING SYSTEM The Finance department is responsible for providing financial and administrative services for the District, including financial accounting and reporting, payroll and accounts payable disbursement functions, cash, investments and debt management, budgeting, grant administration, purchasing, data processing, customer billing, processing of customer payment, customer service, internal auditing, administrative services, human resources, and special financial analyses. The District reports its activities as an enterprise fund, which is used to account for operations similar to business enterprises, where the provision of services is financed or recovered primarily through user charges. BUDGETING CONTROLS The District views the budget as an essential tool for proper financial management. The District adopts a budget annually to outline major elements of the forthcoming year s operating and capital plans and to allocate funding required for those purposes. It is designed and presented for the general needs of the District, its staff, and its customers. It is a comprehensive and, for the most part, a balanced financial plan that features District services, resources and their allocation, financial policies, and other useful information to allow users to gain a general understanding of the District s financial status and future. The District s operating and capital budgets are approved by the Board of Directors. Board approval is required for iv

13 any increase in appropriations. Actual expenditures are then compared to these appropriations on a monthly basis and are distributed to all department heads monthly and to the Board quarterly. Annual operating water user rates and charges are derived from the annual operating budget and are based on historical seasonal demand, and other internal and external factors impacting the budget. The District maintains two sets of user rates and charges to account for the differing entitlement of the respective geographic areas to local water. One set is for the General District and the other for Improvement District A. Higher pumping charges apply in higher elevations throughout the District. CASH MANAGEMENT The District is regulated by State law (primarily California Government Code Section et seq.) as to the types of securities in which it can invest its cash assets. In addition, the Board of Directors annually adopts an investment policy that is generally more restrictive than the State codes. The District s investment policy governs the cash management and investment of all District funds. The standard practice of the District is to maintain an appropriate balance between safety, liquidity, and yield of its investments while meeting required expenditures, and conforming to all applicable State laws, the District s investment policy, and prudent cash management principles. Certificates of Deposit 26% Treasuries 20% Local Agency Investment Fund (LAIF) 31% Checking & Savings 23% For the fiscal year , the District s fixed income investment portfolio consisted primarily of short-term securities with an average maturity of 296 days or just over 9 ¾ months. These securities included the State-managed Local Agency Investment Fund (LAIF) and various Certificates of Deposit (CD s). At June 30, 2015, the District s cash assets totaled $1.9 million. The diversification of the portfolio is shown in the chart to the right. These cash balances are allocated to various restricted funds. RISK MANAGEMENT In 1996, the District became a member of the Joint Powers Insurance Authority (JPIA), a pooled insurance program developed by the Association of California Water Agencies that provides the District s coverage for general liability insurance, property insurance, employee bonds, and other blanket coverage. In 2003 the District added the worker s compensation coverage under JPIA. During fiscal year , the District continued its proactive liability risk management role through careful monitoring of losses and designing and implementing programs to minimize risks. In addition, management analyzes workers compensation issues by monitoring work conditions, and organizing and implementing safety training programs to reduce employee exposure to hazards. The District proudly maintains an excellent low loss history in all of the JPIA programs. PENSION AND DEFERRED COMPENSATION PLANS The District provides two complementary retirement plan programs for employees. The first is a defined benefit pension plan through the California Public Employees Retirement System (CalPERS). The District contributes a specified percentage of covered employees payroll, which is invested by CalPERS. Upon retirement, District employees are entitled to a specified retirement benefit. The plan is more fully described in Note 5 to the Financial Statements. In addition, the District has adopted a Deferred Compensation Plan in accordance with Section 457(b) of the Internal Revenue Code. All contributions to the Deferred Compensation Plan are employee contributions. The employees are not liable for income taxes on amounts deferred until the funds are withdrawn. The deferred compensation plan was amended May 26, 2009, in accordance with recent changes in the Internal Revenue code. In accordance with these and previous Internal Revenue code revisions, all assets in the Plans are held in trust for the exclusive benefit of the participants and their beneficiaries and therefore are not recognized in the accompanying financial statements. As of June 30, 2015, 10 current employees were participating in the 457(b) plan with accumulated assets from past and current employees totaling $532,655. v

14 AWARDS The Government Finance Officers Association (GFOA) of the United States and Canada awarded a Certificate of Achievement for Excellence in Financial Reporting to Yuima Municipal Water District for its comprehensive annual financial report (CAFR) for the fiscal year ended June 30, This is the seventh year that the District has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a District must publish an easy to read and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. In 2015, the District also received a Certificate in Excellence Award for development and adoption of a Disaster Preparedness Policy. The District policy is designed to lessen the impact of a disaster upon the financial, investments, payroll/personnel, and operations of the District. The policy, which contains seven areas of prioritization, establishes procedures to permit the District to maintain efficient operational control of facilities and functions in the aftermath of a disaster. The areas of operational functions include, but are not limited to, restoring reliable, potable water, re-establishing financial accounting functions including payroll and personnel functions, and re-building computer functions including restoring electronic records. In August of 2013, the District was formally recognized for having their written investment policy certified by the Association of Public Treasurer s of the United States and Canada ( Association ). The District s policy was reviewed and certified as meeting the standards set forth by the Association. The District was honored at the Association s 43 rd Annual Conference. This is the third time the District has received this award. The Association s Investment Policy Certification Program ( Program ) was developed in The Program was instituted in an effort to assist state and local governments interested in drafting or improving upon an existing investment policy. The District s policy included 18 sections that the Association deems as critical elements; liquidity; selection and review of suitable investment instruments; internal controls; reporting; portfolio diversification; custody and safekeeping; selection of investment institution criteria; ethics; and conflicts of interest. A written investment policy is only certified when the Association s Investment Policy Review Team acknowledges that the policy has met all criteria set forth in the Program. The Certificate is valid for a period of three years. ASSOCIATION OF CALIFORNIA WATER AGENCIES, JOINT POWERS INSURANCE AUTHORITY (ACWA/JPIA) PRESIDENT S SPECIAL RECOGNITION AWARD Each year, ACWA/JPIA reviews the insurance claims history of all agencies participating in the Liability, Property, and Workers Compensation pooled insurance programs. Those agencies that have maintained a ratio of 20% or less when comparing claims paid versus premiums paid are awarded a certificate of recognition. The district received the President s Special Recognition Award from JPIA for achieving a low loss ratio in the worker s compensation, property and liability programs from 2005 until 2014, demonstrating staff s dedication to maintaining an aggressive risk management strategy for reducing accidents and losses while promoting a safe and healthy working environment. CONTACTING THE DISTRICT S FINANCE DEPARTMENT This financial report is designed to provide the Board, customers, creditors, and investors with a general overview of the District s financial condition. Should you have any questions regarding the content of this report, please contact Lori A. Johnson, Yuima Municipal Water District s Director of Finance, at (760) or lori@yuimamwd.com. vi

15 A ACKNOWLEDGMENTS The preparation of this report could not have been accomplished without the contribution of the Finance Department and our independent auditor, Teaman, Ramirez and Smith, Inc. We would alsoo like to particularly thank the Board of Directors for their continued dedication supporting the highest level of prudent fiscal management. Respectfully Submitted: Lori A. Johnson, Director of Finance vii

16 ORGANIZATION CHART Fiscal Year Ended June 30, 2015 viii

17 PRINCIPAL OFFICIALS Fiscal Year Ended June 30, 2015 BOARD OF DIRECTORS W.D. Bill Knutson, President Ron W. Watkins, Vice President George Stockton, Secretary/Treasurer Mike Fitzsimmons, Director Lynne Laney Villalobos, Director GENERAL MANAGER Linden A. Burzell DIRECTOR OF FINANCE Lori A. Johnson DIRECTOR OF OPERATIONS Todd Engstrand GENERAL COUNSEL Jeffrey G. Scott INDEPENDENT AUDITOR TEAMAN, RAMIREZ & SMITH, INC. ix

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20 Emphasis of Matter Change in Accounting Principle As described in Note 1 to the financial statements, in 2015, the District adopted new accounting guidance, GASB Statement No. 68, Accounting and Financial Reporting for Pensions an Amendment of GASB Statement No. 27, and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date an Amendment of GASB Statement No. 68. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and the required supplementary information on pages 3-11 and be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District s basic financial statements. The introductory section and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The introductory and statistical sections have been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 23, 2015, on our consideration of the District s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering District s internal control over financial reporting and compliance. Riverside, California December 23,

21 MANAGEMENT S DISCUSSION AND ANALYSIS Fiscal Year Ended June 30, 2015 This section of the Yuima Municipal Water District's Comprehensive Annual Financial Report (CAFR) presents Management's Discussion and Analysis of the District's financial performance for fiscal year ended June 30, 2015, and includes the Governmental Accounting Standard Board's (GASB) enhanced financial reporting requirements. We offer readers of the Yuima Municipal Water District s financial statements this narrative overview and analysis of the financial position and results of operations for the fiscal year ended June 30, Included in this section are: Financial Statement Overview; Analysis of Financial Position and Results of Operations; Overview of the Accompanying Basic Financial Statements; The Letter of Transmittal can be found on pages i-vii and should be read in conjunction with the audited financial statements. The audited financial statements are located in the section following the MD&A. All amounts, unless otherwise indicated, are expressed in thousands of dollars. FINANCIAL STATEMENTS OVERVIEW - FISCAL YEAR ENDED JUNE 30, 2015 Statement of Net Position - The Statement of Net Position presents the District's financial position relating to assets, liabilities, and deferred inflows/outflows of resources. Assets in excess of liabilities and deferred inflows/outflows (Net Position) for fiscal year decreased $1,908,364 over fiscal year , from $14,429,169 to $12,519,804, which correlates to the decrease as presented on the Statements of Revenues, Expenses, and Changes in Net Position. Of this amount, $399,472 may be used to meet the District's ongoing obligation to citizens and creditors. Yuima Municipal Water District Net Position Governmental Business-type Activities (Fire Protection) Activities (Water Operations) Total Current and other assets $ 115,483 $ 92,942 $ 3,215,947 $ 4,366,603 $ 3,331,430 $ 4,459,545 Capital assets ,218,030 14,279,838 14,218,030 14,279,838 Total Assets $ 115,483 $ 92,942 $ 17,433,977 $ 18,646,442 $ 17,549,460 $ 18,739,384 Deferred Outflows of Resources $ - $ - $ 540,519 $ - $ 540,519 $ - Long-term liabilities outstanding $ - $ - $ 4,088,355 $ 2,281,083 $ 4,088,355 $ 2,281,083 Other liabilities - 32,000 1,083,543 1,998,132 1,083,543 2,030,132 Total liabilities $ - $ 32,000 $ 5,171,898 $ 4,279,215 $ 5,171,898 $ 4,311,215 Deferred Inflows of Resources $ - $ - $ 398,277 $ - $ 398,277 $ - Net Position: Net Investment in Capital Assets $ - $ - $ 12,120,332 $ 11,878,249 $ 12,120,332 $ 11,878,249 Restricted Unrestricted 115,483 60, ,989 2,488, ,472 2,549,920 Total net position $ 115,483 $ 60,942 $ 12,404,321 $ 14,367,227 $ 12,519,804 $ 14,428,169 Statement of Activities and Changes in Net Position - The Statement of Activities and Changes in Net Position accounts for all activities during the fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g. uncollected taxes and earned but unused vacation leave). This statement measures the success of the District s operations during the reporting period and can be used to assess whether or not the District has successfully recovered all of its costs through its user fees and other charges. This statement also measures the District s solvency and ability to meet its financial commitments. 3

22 ANALYSIS OF FINANCIAL POSITION AND RESULT OF OPERATIONS The District s overall financial position was affected by the implementation of the GASB 68 requirement to begin recording the Unfunded Accrued Liability of the District s pension plan. This requirement included the recording of the PERS side fund balance as of the end of the 2013/14 fiscal year and resulted in a considerable reduction in the District s reserve balance. Analysis of Net Position Net Position is the difference between assets acquired, owned, and operated by the District and amounts owed (liabilities), and deferred inflows/outflows of resources. In accordance with Generally Accepted Accounting Principles (GAAP), capital assets acquired through purchase, or construction by the District, are recorded at historical cost. Capital assets contributed by developers are recorded at developers construction cost. Net Position represents the District s net worth including, but not limited to, capital contributions received to date and all investment in capital assets since formation. Net Position helps answer the following question: Is the District, as a whole, better or worse off as a result of this year s activities? As reported in the Statements of Net Position, the net position decreased between fiscal years ending 2014 and 2015 from $14,428,169 to $12,519,804. Net investment in Capital Assets, increased $242,083, and unrestricted net position decreased $2,150,448. Yuima Municipal Water District Change in Net Position Governmental Business-type Activities (Fire Protection) Activities (Water Operations) Total Revenues: Program Revenues: Charges for Services $ 56,838 $ 55,052 $ 11,150,341 $ 11,183,476 $ 11,207,179 $ 11,238,528 Operating Grants and Contributions - 1, ,650 Capital Grants and Contributions General Revenues: - Property Taxes , , , ,146 Investment Earnings ,582 34,020 22,596 34,031 Other 79,495 8, ,219 27, ,714 35,401 Total Revenues 136,347 64,916 11,750,191 11,622,840 11,886,538 11,687,756 Expenses: Fire Protection 81,806 5, ,806 5,486 Water Enterprise ,713,096 12,972,013 13,713,096 12,972,013 Total Expenses 81,806 5,486 13,713,096 12,972,013 13,794,902 12,977,499 Increase (Decrease) in Net Position 54,541 59,430 (1,962,905) (1,349,173) (1,908,364) (1,289,743) Net Position - Beginning 60,942 1,512 14,367,227 15,716,400 14,428,169 15,717,912 Net Position - Ending $ 115,483 $ 60,942 $ 12,404,321 $ 14,367,227 $ 12,519,804 $ 14,428,169 ANALYSIS OF GOVERNMENTAL FUND AND GOVERNMENTAL ACTIVITIES FIRE FUND The District s fire protection fund to the government-wide financial statements has no reconciling items from the modified accrual to a full accrual basis. The information below provides an analysis of the increases or decreases in the activities for the governmental fund and governmental activities since the information on both the government-wide and fund statements reflect the same reported figures. The key factors in the increase of the Fire Protection Activities net assets and fund balance is as follows: The Fire Protection revenues totaling $136,347 were sufficient to cover the expenditures of $81,806 resulting in an increase in net position totaling $54,541 for the fiscal year. There were no charges under the fire contract with the State of California this year. This was due to the extended fire season and the consequent decision of the state not to invoke a Non-Fire season during which the District would normally be paying for fire protection services. ANALYSIS OF PROPRIETARY FUND AND BUSINESS-TYPE ACTIVITIES WATER OPERATIONS The District s proprietary fund provides the same type of information found in the government-wide financial statements, but in more detail. Below is an analysis of the increases or decreases in the activities for the proprietary fund and business-type activities. 4

23 Statement of Revenues, Expenses, and Changes in Net Position - The Statement of Revenues, Expenses, and Changes in Net Position summarizes the District s operations during the year. In accordance with Generally Accepted Accounting Principals (GAAP), revenues are recognized (recorded) when services are provided, and expenses are recognized when incurred. Operating revenues and expenses are related to the District's core activities. Non-operating revenues and expenses are not directly related to the core activities of the District (e.g. investment earnings, property taxes, and interest expenses). The operating margin for the year ended June 30, 2015 of ($629,742) is combined with total non-operating revenues of $864,888 and non-operating expenses of $110,746 to arrive at the increase in net position of $124,399. The increase in net position, in addition to the prior year adjustment for the Unfunded Accrued Liability of ($2,087,305) is added to the beginning net position of $14,367,227 to arrive at the ending net position total of $12,404,321 as of June 30, Change in Net Position & Analysis of Statement of Revenues, Expenses, and Changes in Net Position - The District's total revenues of $11,750,191 for the fiscal year is comprised of $10,885,303 for Operating and $864,888 for Non- Operating Revenues. The annual revenue increased $127,350 or 1.09% from the prior fiscal year due to multiple factors. The largest increase was within the Non-Operating Revenues where additional Capacity and Special Connections Fees were collected. These fees are not normal and fluctuate annually depending on the several factors. Capacity charges are collected when a new meter is installed within the General District, conversely, Special Connection Fees are based on acreage eligible to irrigate in the Improvement District A (IDA). During the fiscal year, Yuima began auditing the approved irrigation acreage in comparison to the actual number of acres being irrigated which resulted in additional IDA Special Connection Fees being collected. Details of the total increase in revenues are as follows: Water Sales including associated customer fees and charges decreased by $39,376, or 0.4% for the fiscal year ended June 30, Property taxes and assessments and Other Non- Operating Revenues increased by $178,165, or 27.9%, from to is inclusive of the additional Meter Capacity and Special Connection Fees collected during the year Investment earnings was down 33.6%, or $11,438, from the prior year. The decrease is due to a decrease in cash invested. The District s total expenses decreased by $1,346,225 or 10.37% in , from $12,972,016 to $11,625,791. The largest reduction of expenditures occurred within the Operating Expenses; specifically the categories of Cost of Water Sold and General and Administrative. The District General and Administrative cost reduction of $792,784 was due to the reduction of legal fees from 2014 to 2015 due to the lawsuit filed by Rancho Pauma Mutual Water Company. Details of the total decrease in Expenditures are as follows: Cost of water sold including pumping, water treatment, transmission, customer service and general plant and depreciation costs decreased by $375,249, or 2.9%, due to a reduction in the amount of purchased (imported) water from the San Diego County Water Authority. General and Administrative costs realized a significant reduction of $792,784, or 32.1%, in legal fees due to the conclusion of the Rancho Pauma Mutual Water Company lawsuit. The Other Non-Operating expenses decreased $178,192 due to a reduction in long term debt interest and net book value of retired fixed assets. 5

24 6

25 Schedule of Revenues, Expenses and Change in Position Yuima - General District Proprietary Fund Increase/ Percent (Decrease) Change Operating revenues: Water sales & Pumping charges $5,358,879 $5,153,741 $205, % Other customer fees and charges 217, ,830 23, % Total operating revenues 5,575,900 5,347, , % Operating expenses: Cost of water sold 4,634,376 4,585,308 49, % Pumping and energy costs 432, ,964 (30,540) -6.6% Water Treatment 33,089 35,781 (2,692) -7.5% Transmission and distribution 140, ,203 (114,075) -44.9% Customer services 42,836 34,708 8, % General Plant 36,809 43,368 (6,559) -15.1% General and administrative 911,119 1,419,171 (508,052) -35.8% Depreciation 205, ,454 (6,025) -2.8% Total operating expenses 6,436,210 7,046,957 (610,747) -8.7% Operating income (loss) (860,310) (1,699,386) 839, % Non-operating revenues: Investment earnings 1,734 14,169 (12,435) -87.8% Property taxes,assmts,conn fees & leases 474, ,648 36, % Other non-operating revenues 45,150 39,236 5, % Total non-operating revenues 521, ,053 30, % Non-operating expenses: Other non-operating expenses 12, ,276 (127,258) 0.0% Interest on long term debt 6,312 14,297 (7,985) -55.9% Total non-operating expenses 18, ,573 (135,243) -88.1% Revenues over/(under) Expenditures (357,202) (1,361,906) 1,004, % Capital Contributions Change in net position (357,202) (1,361,906) 1,004, % Net position, beginning of year - 4,776,352 6,138,258 (1,361,906) -22.2% Prior Period Adjustment (2,087,305) - (2,087,305) 0.0% Total Net Position, End of year $ 2,331,845 $4,776,352 $ (2,444,507) -51.2% 7

26 Schedule of Revenues, Expenses and Change in Net Position Improvement District A Proprietary Fund Increase/ Percent (Decrease) Change Operating revenues: Water sales & Pumping charges $4,913,715 $5,203,209 -$289, % Other customer fees and charges 395, ,899 21, % Total operating revenues 5,309,403 5,577,108 (267,705) -4.8% Operating expenses: Cost of water sold 2,419,183 2,984,581 (565,398) -18.9% Pumping and energy costs 1,078,576 1,011,288 67, % Water Treatment 53,738 59,703 (5,965) -10.0% Transmission and distribution 303, , , % Customer services 78,098 53,582 24, % General Plant 32,113 36,289 (4,176) -11.5% General and administrative 763,043 1,047,776 (284,733) -27.2% Depreciation 350, ,789 30, % Total operating expenses 5,078,835 5,636,121 (557,286) -9.9% Operating income (loss) 230,568 (59,013) 289, % Non-operating revenues: Investment earnings 20,848 19, % Property taxes,assmts,conn fees & leases 324, , , % Other non-operating revenues (2,032) (99) (1,933) % Total non-operating revenues 343, , , % Non-operating expenses: Other non-operating expenses 37,869 67,078 (29,209) 0.0% Interest on long term debt 54,547 68,287 (13,740) -20.1% Total non-operating expenses 92, ,365 (42,949) -31.7% Revenues over/(under) Expenditures 481,601 12, , % Capital Contributions Change in net position 481,601 12, , % Net position, beginning of year - 9,590,875 9,578,142 12, % Prior Period Adjustment % Total Net Position, End of year $10,072,476 $9,590,873 $481, % 8

27 Statement of Cash Flows - The Statements of Cash Flows present the amounts of cash provided or used by the District's operating, financing, and investment activities during the reporting period. Every cash flow has been categorized as one of the following activities: operating, noncapital financing, capital and related financing, or investing. The primary purpose of this report is to provide information to the general readers about cash inflows and outflows which occurred during the reporting fiscal year. The Cash Flow statement helps the readers to answer the following questions: Where did cash come from; what was cash used for, and; what was the change in cash during the fiscal year? The total of these categories for the year ended June 30, 2015, represents a decrease in cash and cash equivalents of $1,104,883 which is combined with beginning cash and cash equivalents of $3,055,897 to arrive at ending cash and cash equivalents of $1,951,014. NOTES TO THE FINANCIAL STATEMENTS The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages of this report. The government-wide financial statements can be found on pages of this report. OTHER INFORMATION In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the Yuima Municipal Water District s progress in funding its obligation to provide pension benefits to its employees. Required supplementary information can be found on pages of this report. CAPITAL ASSETS AND CAPITAL PROJECTS The District s Capital Assets in service at June 30, 2015 totaled $23,779,657 less $9,561,627 of accumulated depreciation, for a net book value of $14,218,030. Additional information on capital assets can be found in Note 3 to the financial statements. Capital Asset additions being depreciated totaled $640,446 and included the following: Capital Asset Additions Yuima IDA Total Source of Supply $ - $ 416,982 $ 416,982 General Plant Additions 55,293 77, ,202 Pumping Plant 23,325 38,999 62,324 Water Treatment 3,446-3,446 Pipelines (Transmission & Distribution) - 23,741 23,741 Total $ 82,064 $ 557,631 $ 639,695 Deletions of Capital Assets being depreciated totaled $171,076 for retirement of equipment replacements. Also included in the total reported on the Statement of Net Position is construction-in-progress, which reflects capital projects in various stages of completion. As of June 30, 2015, there were no capital projects in progress. The District s capital assets were financed through a combination of current revenues, available reserves from the capital fund and capacity (connection fee) fund, and debt issuances. The District collects capacity fees from new development. These fees are restricted and used exclusively to provide capacity to service new development and fund future construction of facilities identified in the District s Master Plan. As of June 30, 2015 all capacity fees collected in prior years have been used for this purpose. Growth in the area is slow to none. There was one new meter set and $15,569 in capacity fees collected in fiscal year The District does not expect any change in growth in the area for the next few years. The District s CIP is expected to fluctuate from year to year depending on the construction cost of infrastructure projects that are currently under construction or are in the planning stages. 9

28 LONG-TERM DEBT At the end of the current fiscal year, the Yuima Municipal Water District had total debt outstanding of $4,217,771, including $309,611 which is the portion that is due within one year. The debt associated with Capital Projects was incurred to finance the replacement of several tanks which includes Reservoir 8 with a 1.7 million gallon tank and pump station and the construction of Eastside Tank with a capacity of 3 million gallons and pump station as well as the Zone 4 Tank with a capacity of 1.2 million gallons. The remaining debt was incurred as a result of the required implementation of GASB 68. Additional information on long-term debt can be found in Notes 1 & 5 to the financial statements. The District s outstanding bond indebtedness as of June 30, 2015 is as follows: Schedule of Bond Indebtedness Fiscal Year Ended June 30, 2015 Long-term Debt Year Total Final Maturity Fixed Interest Debt Outstanding (Audited) As of June 30, 2015 Description District Issued Debt Date Rate Current Long Term Total Eastside Tank & Pump Station Yuima 2004 $ 1,500, % $ 149,665 $ 76,154 $ 225,819 Tank 8 and Pump Station IDA 2007 $ 1,500, % $ 106,762 $ 766,874 $ 873,636 Zone 4 Tank IDA 2013 $ 900, % $ 33,270 $ 818,970 $ 852,240 Station 1 SDG&E On-Bill IDA 2013 $ 111, % $ 12,039 $ 74,243 $ 86,282 Station 4 SDG&E On-Bill IDA 2013 $ 75, % $ 7,875 $ 51,846 $ 59,721 Net Pension Liability (Note 5) Yuima/IDA $ - $ 2,120,073 $ 2,120,073 Total $ 4,086,489 $ 309,611 $ 3,908,160 $ 4,217,771 FUTURE INFRASTRUCTURE PLANNING Based upon long-term demand forecasts for agricultural and urban development within the current boundaries of the District, coupled with a number of annexation requests expected to be driven by local water shortages affecting both agriculture and new housing in adjacent under-served areas, the District has determined that a new transmission pipeline will eventually be required to bring additional imported water into the District from the first and second San Diego Aqueduct Pipelines. Two potential routes are under consideration. The first ( Southern Route ) would parallel the District s existing 20 pipeline and would be built at the sole expense of the District. The second ( Northern Route ) would be a joint venture between the San Luis Rey Indian Water Authority and the District, and would connect to the Metropolitan Water District portion of the aqueduct at a point just north of the jurisdictional boundary with the San Diego County Water Authority. No definitive timetable for the construction of either a Southern or Northern Route pipeline has yet been established. ECONOMIC FACTORS The District derives funding for operations from customer rates, fees, and charges. To the extent required, the District has the ability to generate additional funding resources through rate adjustments to cover the costs for providing water services. The District sets its rates annually based upon anticipated consumption. A significant reduction in consumption could have an adverse effect on the District s financial position. Listed below are a few highlights of the economic factors that impact our District. The District sold 31.7% of total water delivered during the year to one customer. The same customer has been one of the top ten water consumers in the District for the last 20 years averaging 30% of the District sales. The District realized a $124,399 operating gain during fiscal year as compared to a $1,349,173 operating loss during fiscal year In fiscal year , the District purchased 62.3% of its water sold from the San Diego County Water Authority, compared to 60% in fiscal year In May 2015, in response to the Governor s executive order, the California State Water Resources Control Board issued mandatory water cutbacks for all of California s local water suppliers, to reduce the statewide annual water use by 25% over 2013 levels. 10

29 The District has invested significantly in diversifying its water supply by increasing its local supply through additional wells and local well agreements to reduce its reliance on the high cost imported water supply from the San Diego County Water Authority. Keeping the District s financial position strong will be critical in the future as increased capital spending will be required. Governor Brown signed the California Public Employees Pension Reform Act of 2013 (PEPRA) into law. PEPRA took effect January 1, The provisions in PEPRA will affect the District s future defined benefit pension costs with the California Public Employees Retirements System (CalPERS) for new hires after January 1, The District has implemented several cost containment strategies to mitigate pension and Other Post Employment Benefit (OPEB) burdens on the District. Yuima MWD employees are now paying 71% of the employee s portion (8%) of District s pension costs; ultimately employees will pay 100% of that cost in compliance with PEPRA. CONTACTING THE DISTRICT S FINANCIAL MANAGEMENT This financial report is designed to provide the District s rate payers, bond investors and other interested parties with a general overview of the District s finances, and to demonstrate the District s accountability for the money it received and the stewardship of the facilities it maintains. If you have any questions about this report or need additional financial information, contact the Yuima Municipal Water District s Finance Department, Lori A. Johnson, Director of Finance, Valley Center Road, Pauma Valley, Ca , or call (760) , or send inquiries to our website at 11

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31 Statement of Net Position June 30, 2015 Governmental Business-type Activities Activities Total ASSETS Cash and Investments $ 2,500 $ 1,951,014 $ 1,953,514 Accounts Receivable 1, , ,040 Taxes Receivable 2,954 20,436 23,390 Interest Receivable 3,705 3,705 Internal Balances 108,511 (108,511) 0 Inventories 329, ,528 Prepaids 34,253 34,253 Capital Assets, Not Being Depreciated: Land and Improvements 1,301,457 1,301,457 Capital Assets, Net of Depreciation: General Plant 420, ,626 Source of Supply 6,995,315 6,995,315 Pumping Plant 2,217,450 2,217,450 Water Treatment Plant 91,888 91,888 Transmission and Distribution Plant 3,191,294 3,191,294 Total Assets 115,483 17,433,977 17,549,460 DEFERRED OUTFLOWS OF RESOURCES Pension Related Items 540, ,519 Total Deferred Outflows of Resources 0 540, ,519 LIABILITIES Accounts Payable 676, ,813 Deposits and Other Liabilities 39,098 39,098 Interest Payable 24,508 24,508 Long-term Liabilities: Due Within One Year 363, ,038 Due in More Than One Year 4,068,441 4,068,441 Total Liabilities 0 5,171,898 5,171,898 DEFERRED INFLOWS OF RESOURCES Pension Related Items 398, ,277 Total Deferred Inflows of Resources 0 398, ,277 NET POSITION Net Investment in Capital Assets 12,120,332 12,120,332 Restricted for Fire Protection 115, ,483 Unrestricted 283, ,989 Total Net Position $ 115,483 $ 12,404,321 $ 12,519,804 The accompanying notes are an integral part of this statement. 12

32 Statement of Activities Year Ended June 30, 2015 Program Revenues Charges Operating Capital for Grants and Grants and Functions/Programs Expenses Services Contributions Contributions Governmental Activities: Fire Protection $ 81,806 $ 56,838 $ 79,495 $ Business-type Activities: Water Enterprise 11,625,791 11,260,495 Total Primary Government $ 11,707,597 $ 11,317,333 $ 79,495 $ 0 General Revenues: Unrestricted Intergovernmental Investment Earnings Other Total General Revenues Change in Net Position Total Net Position - Beginning, As Previously Reported Prior Period Adjustment Total Net Position - Beginning, As Restated Total Net Position - Ending The accompanying notes are an integral part of this statement. 13

33 Net (Expense) Revenue and Changes in Net Position Governmental Business-type Activities Activities Total $ 54,527 $ $ 54,527 (365,296) (365,296) 54,527 (365,296) (310,769) 396, , ,582 22,596 71,076 71, , ,709 54, , ,940 60,942 14,367,227 14,428,169 (2,087,305) (2,087,305) 60,942 12,279,922 12,340,864 $ 115,483 $ 12,404,321 $ 12,519,804 The accompanying notes are an integral part of this statement. 14

34 Balance Sheet Governmental Fund June 30, 2015 Fire Protection ASSETS Cash and Investments $ 2,500 Accounts Receivable 1,518 Taxes Receivable 2,954 Due from Other Funds 108,511 Total Assets $ 115,483 LIABILITIES AND FUND BALANCE Liabilities Other Current Liabilities $ 0 Total Liabilities 0 Fund Balance Restricted for Fire Protection 115,483 Total Fund Balance 115,483 Total Liabilities and Fund Balance $ 115,483 Fund Balance of Governmental Fund $ 115,483 Amounts reported for Governmental Activities in the Statement of Net Position are different because: Reconciling items to the Statement of Net Position 0 Net Position of Governmental Activities $ 115,483 The accompanying notes are an integral part of this statement. 15

35 Statement of Revenues, Expenditures and Changes in Fund Balance - Governmental Fund Year Ended June 30, 2015 Fire Protection REVENUES Fire Protection Special Tax $ 54,663 Mitigation Fees 2,175 Investment Earnings 14 Grants 79,495 Total Revenues 136,347 EXPENDITURES General and Administrative 3,567 Fire Protection 78,239 Total Expenditures 81,806 Excess (Deficiency) of Revenues Over Expenditures 54,541 Fund Balance, Beginning 60,942 Fund Balance, Ending $ 115,483 Excess (Deficiency) of Revenues Over Expenditures $ 54,541 Amounts reported for Governmental Activities in the Statement of Activities are different because: Reconciling items to the Statement of Activities 0 Changes in Net Position of Governmental Activities $ 54,541 The accompanying notes are an integral part of this statement. 16

36 Statement of Net Position Proprietary Fund June 30, 2015 ASSETS Current Assets: Cash and Cash Equivalents $ 1,951,014 Accounts Receivable 985,522 Taxes Receivable 20,436 Interest Receivable 3,705 Inventories 329,528 Prepaids 34,253 Total Current Assets 3,324,458 Noncurrent Assets: Capital Assets, Not Being Depreciated 1,301,457 Capital Assets, Net of Depreciation 12,916,573 Total Noncurrent Assets 14,218,030 Total Assets 17,542,488 DEFERRED OUTFLOWS OF RESOURCES Pension Related Items 540,519 Total Deferred Outlows of Resources 540,519 LIABILITIES Current Liabilities: Accounts Payable 676,813 Compensated Absences - Current Portion 53,427 Deposits and Other Liabilities 39,098 Interest Payable 24,508 Due to Other Funds 108,511 Notes Payable - Current Portion 309,611 Total Current Liabilities 1,211,968 Noncurrent Liabilities: Compensated Absences 160,281 Net Pension Liability 2,120,073 Notes Payable 1,788,087 Total Noncurrent Liabilities 4,068,441 Total Liabilities $ 5,280,409 The accompanying notes are an integral part of this statement. 17

37 Statement of Net Position - Continued Proprietary Fund June 30, 2015 DEFERRED INFLOWS OF RESOURCES Pension Related Items $ 398,277 Total Deferred Inflows of Resources 398,277 NET POSITION Net Investment in Capital Assets 12,120,332 Unrestricted 283,989 Total Net Position $ 12,404,321 The accompanying notes are an integral part of this statement. 18

38 Statement of Revenues, Expenses and Changes in Net Position Proprietary Fund Year Ended June 30, 2015 OPERATING REVENUES Water Sales and Pumping Charges $ 10,272,594 Other Services 612,709 Total Operating Revenues 10,885,303 OPERATING EXPENSES Purchased Water 7,053,559 Pumping 1,511,000 Water Treatment 86,827 Transmission and Distribution 443,897 Customer Accounts 120,934 General Plant 68,922 General and Administrative 1,674,163 Depreciation 555,743 Total Operating Expenses 11,515,045 Operating Income (Loss) (629,742) NON-OPERATING REVENUES (EXPENSES) Property Taxes and Assessments 401,473 Availability Charges 176,975 Lease Income 76,882 Investment Earnings 22,582 Other Non-operating Revenues 186,975 Interest Expense (60,859) Other Non-operating Expenses (49,887) Total Non-Operating Revenues (Expenses) 754,141 Change in Net Position 124,399 Beginning Net Position, As Previously Reported 14,367,227 Prior Period Adjustment (2,087,305) Beginning Net Position, As Restated 12,279,922 Total Net Position, Ending $ 12,404,321 The accompanying notes are an integral part of this statement. 19

39 Statement of Cash Flows Proprietary Fund Year Ended June 30, 2015 CASH FLOWS FROM OPERATING ACTIVITIES Cash Received from Customers $ 10,907,037 Cash from Other Operating Activities 186,975 Cash Payments to Employees 1,022,351 Cash Payments to Suppliers (12,997,871) Net Cash Provided by (Used for) Operating Activities (881,508) CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES Property Taxes 392,490 Availability Charges 176,975 Lease Income 76,882 Advances to Other Funds 20,672 Net Cash Provided by (Used for) Non-Capital Financing Activities 667,019 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition of Capital Assets (543,360) Principal Payments on Capital Debt (303,891) Interest Payments on Capital Debt (66,659) Net Cash Provided by (Used for) Capital and Related Financing (913,910) CASH FLOWS FROM INVESTING ACTIVITIES Investment Earnings 23,516 Net Cash Provided by (Used for) Investing Activities 23,516 Net Increase (Decrease) in Cash and Cash Equivalents (1,104,883) Cash and Cash Equivalents - Beginning of Year 3,055,897 Cash and Cash Equivalents - End of Year $ 1,951,014 Reconciliation of Operating Income (Loss) to Net Cash Provided by (Used for) Operating Activities: Net Operating Income (Loss) $ (629,742) Adjustments to Reconcile Operating Income to Net Cash Provided by (Used for) Operating Activities: Depreciation 555,743 Miscellaneous Revenues 186,975 Miscellaneous Expenses (463) (Increase) Decrease in Accounts Receivable 7,850 (Increase) Decrease in Inventories 27,371 (Increase) Decrease in Prepaids (2,070) (Increase) Decrease in Pension Related Deferred Outflows of Resources (180,149) Increase (Decrease) in Accounts Payable (929,543) Increase (Decrease) in Compensated Absences (2,040) Increase (Decrease) in Deposits and Other Liabilities 13,884 Increase (Decrease) in Net Pension Liability (327,601) Increase (Decrease) in Pension Related Deferred Inflows of Resources 398,277 Total Cash Provided by (Used for) Operating Activities $ (881,508) The accompanying notes are an integral part of this statement. 20

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41 Notes to Financial Statements Year Ended June 30, 2015 NOTE DESCRIPTION PAGE 1 Reporting Entity and Significant Accounting Policies Cash and Investments Capital Assets 35 4 Long-term Liabilities Pension Plans Postemployment Benefits Other than Pensions Deferred Compensation Plan 46 8 Fire Mitigation Fee Program 47 9 Net Position - Designated Joint Venture Risk Management Commitments and Contingencies Prior Period Adjustment 48 21

42 Notes to Financial Statements Year Ended June 30, ) REPORTING ENTITY AND SIGNIFICANT ACCOUNTING POLICIES A) Reporting Entity The Yuima Municipal Water District (the "District") was formed in January 1963 pursuant to Section 8 of the California Municipal Water District Act of 1911 to improve the delivery of agricultural and domestic water services, and to facilitate the acquisition of a supplemental water supply from the Metropolitan Water District of California within its boundaries. The District is governed by an elected, five-member Board of Directors (the Board ). The 1963 General Obligation Bonds financed the construction of the necessary pipelines, pumping and storage facilities to bring Colorado River water from the aqueducts owned by the Metropolitan Water District and the San Diego County Water Authority to serve the properties within its boundaries, which cover about 13,460 acres in northeastern San Diego County, California; the District maintains, develops and manages such water distribution system. The District offices are located in Pauma Valley, California. The area now known as Improvement District A (IDA) was originally known as Rossmoyne Villages ( Rossmoyne ). The Palomar Mutual Water Company ( Palomar Mutual ) became Rossmoyne s successor in interest through an agreement dated February 11, In turn, Palomar Mutual transferred all of its water rights, lands and water system, together with its functions and obligations, to the District in April, Among the transferred obligations was a stipulated judgment (Strub et al. v Palomar or Strub et al. ), filed November 10, 1953 and later modified, that provides for the net delivery to IDA of no more than 1,350 acre-feet of water per calendar year from the San Luis Rey River upstream of Cole Grade Road. The District, as successor in interest to Palomar Mutual, continues to operate IDA as an independent water system (California State System No ). While the District is responsible for administering IDA s compliance with Strub et al., that stipulated judgment does not affect or bind the 70% of the District which is outside of IDA and which operates under a separate system permit (California State System No ). The District added another 351 acres, Annexation #1, in November 1967, and another 63 acres, Annexation #2, in November 1969, by revising its boundaries pursuant to the Reorganization Act of 1965 as amended by LAFCO. The District added another six acres, Fitzsimmons Annexation, on March 26, 1991, and de-annexed 27 acres, Adams Deannexation, on March 29, Hence the District boundaries total 13,460 acres. The Board of Directors and officers of the District at June 30, 2015 are as follows: Name Title Term Expiration W.D. Bill Knutson President December 2018 Ron W. Watkins Vice President December 2016 George Stockton Secretary/Treasurer December 2016 Mike Fitzsimmons Director December 2016 Lynne Villalobos Director December

43 Notes to Financial Statements Year Ended June 30, ) REPORTING ENTITY AND SIGNIFICANT ACCOUNTING POLICIES - Continued B) Implementation of Governmental Accounting Standards Board (GASB) Pronouncements Governmental Accounting Standards Board Statement No. 68 In June of 2012, GASB issued Statement No. 68, Accounting and Financial Reporting for Pensions - an Amendment of GASB Statement No. 27. This statement was issued to improve the financial reporting by state and local governments for pensions. It also improves information provided by state and local governmental employers about financial support for pensions with regard to providing decision-useful information, supporting assessments of accountability and inter-period equity, and creating additional transparency. This statement replaces the requirements of Statement No. 27, Accounting for Pensions by State and Local Governmental Employers, as well as the requirements of Statement No. 50, Pension Disclosures, as they relate to pensions that are provided through pension plans administered as trust or equivalent arrangements that meet certain criteria. The requirements of Statements 27 and 50 remain applicable for pensions that are not covered by the scope of this statement. Statement No. 68 is effective for periods beginning after June 15, The District implemented GASB No. 68 and is reflected on the District's financial statements. Governmental Accounting Standards Board Statement No. 69 In January of 2013, GASB issued Statement No. 69, Government Combinations and Disposals of Government Operations. This statement was issued to improve the financial reporting by state and local governments for government combinations and disposals of government operations. The term government combinations is used in this Statement to refer to a variety of arrangements including mergers and acquisitions. Government combinations also include transfers of operations that do not constitute entire legally separate entities and in which no significant consideration is exchanged. Transfer of operations may be present in shared service arrangements, reorganizations, redistricting, annexations and arrangements in which an operation is transferred to a new government created to provide those services. In addition to providing guidance for reporting such activity, this Statement requires disclosures to be made about government combinations and disposals of government operations to enable financial statement users to evaluate the nature and financial effects of those transactions. Statement No. 69 is effective for periods beginning after December 15, Currently, this statement has no effect on the District's financial statements. Governmental Accounting Standards Board Statement No. 71 In November of 2013, GASB issued Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date An Amendment of GASB Statement 68. This statement was issued to address an issue in Statement No. 68 concerning transition provisions related to certain pension contributions made to defined benefit pension plans prior to implementation of that Statement by employers and nonemployer contributions entities. At the beginning of the period in which the provisions of Statement 68 are adopted, there may be circumstances in which it is not practical for a government to determine the amounts of all applicable deferred inflows of resources and deferred outflows of resources related to pensions. In such circumstances, the government should recognize a beginning deferred outflow of resources only for its pension contributions, if any, made subsequent to the measurement date of the beginning net pension liability but before the start of the government s fiscal year. 23

44 Notes to Financial Statements Year Ended June 30, ) REPORTING ENTITY AND SIGNIFICANT ACCOUNTING POLICIES - Continued B) Implementation of Governmental Accounting Standards Board (GASB) Pronouncements - Continued Governmental Accounting Standards Board Statement No Continued Additionally, in those circumstances, no beginning balances for other deferred outflows of resources and deferred inflows of resources related to pensions should be recognized. Statement No. 71 is effective for periods beginning after June 15, 2014 and should be implemented simultaneously with the provisions of GASB Statement No. 68. The District has implemented GASB No. 68 and 71 and is reflected on the District's financial statements. Governmental Accounting Standard Board Statement No. 72 In February of 2015, GASB issued Statement No. 72, Fair Value Measurement and Application. This Statement addresses accounting and financial reporting issues related to fair value measurements. The definition of fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This Statement provides guidance for determining a fair value measurement for financial reporting purposes. This Statement also provides guidance for applying fair value to certain investments and disclosures related to all fair value measurements. Statement No. 72 is effective for periods beginning after June 15, The District has elected not to early implement GASB No. 72 and has not determined its effect on the District s financial statements. Governmental Accounting Standard Board Statement No. 73 In June of 2015, GASB issued Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68. This Statement was issued to improve the usefulness of information about pensions for making decisions and assessing accountability. This Statement establishes requirements for defined benefit pensions that are not within the scope of Statement No. 68, Accounting and Financial Reporting for Pensions, as well as for the assets accumulated for purposes of providing those pensions. In addition, it establishes requirements for defined contribution pensions that are not within the scope of Statement 68 and also amends certain provisions of Statement No. 67, Financial Reporting for Pension Plans, and Statement 68 for pension plans and pensions that are within their respective scopes. Statement No. 73 requirements that addresses accounting and financial reporting by employers and governmental nonemployer contributing entities is effective for fiscal years beginning after June 15, 2016, except those provisions that address financial reporting for assets accumulated for purposes of providing those pensions which are effective for fiscal years beginning after June 15, Statement No. 73 requirements for pension plans that are within the scope of Statement 67 or for pensions that are within the scope of Statement 68 are effective for fiscal years beginning after June 15, The District has elected not to early implement GASB No. 73 and has not determined its effect on the District s financial statements. 24

45 Notes to Financial Statements Year Ended June 30, ) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued B) Implementation of Governmental Accounting Standards Board (GASB) Pronouncements - Continued Governmental Accounting Standard Board Statement No. 74 In June of 2015, GASB issued Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans. This Statement was issued to improve the usefulness of information about postemployment benefits other than pensions (other postemployment benefits or OPEB) for making decisions and assessing accountability. This Statement replaces Statements no. 43, Financial Reporting for Post-employment Benefit Plans Other Than Pension Plans, as amended, and No. 57, OPEB Measurements by Agent Employers and Agent Multiple- Employer Plans. It also includes requirements for defined contribution OPEB plans that replace the requirements for those OPEB plans in Statement No. 25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans, as amended, Statement 43, and Statement No. 50, Pension Disclosures. Statement No. 74 is effective for fiscal years beginning after June 15, The District has elected not to early implement GASB No. 74 and has not determined its effect on the District s financial statements. Governmental Accounting Standard Board Statement No. 75 In June of 2015, GASB issued Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. This Statement was issued to improve accounting and financial reporting for postemployment benefits other than pensions (other postemployment benefits or OPEB). It also improves information provided by governmental employers about financial support for OPEB that is provided by other entities. This Statement replaces the requirements of Statements No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, as amended, and No. 57, OPEB Measurements by Agent Employers and Agent Multiple-Employer Plans, for OPEB. Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, establishes new accounting and financial reporting requirements for OPEB plans. Statement No. 75 is effective for fiscal years beginning after June 15, The District has elected not to early implement GASB No. 75 and has not determined its effect on the District s financial statements. Governmental Accounting Standard Board Statement No. 76 In June of 2015, GASB issued Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments. This Statement was issued to identify, in the context of the current governmental financial reporting environment, the hierarchy of generally accepted accounting principles (GAAP). The GAAP hierarchy consists of the sources of accounting principles used to prepare financial statements for state and local governmental entities in conformity with GAP and the framework for selecting those principles. This Statement reduces the GAAP hierarchy to two categories of authoritative GAAP and addresses the use of authoritative and nonauthoritative literature in the event that the accounting treatment for a transaction or other event is not specified within a source of authoritative GAAP. This Statement supersedes Statement No. 55, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments. Statement No. 76 is effective for periods beginning after June 15, 2015 and should be applied retroactively. The District has elected not to early implement GASB No. 76 and has not determined its effect on the District s financial statements. 25

46 Notes to Financial Statements Year Ended June 30, ) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued B) Implementation of Governmental Accounting Standards Board (GASB) Pronouncements - Continued Governmental Accounting Standard Board Statement No. 77 In August of 2015, GASB issued Statement No. 77, Tax Abatement Disclosures. This Statement is intended to provide financial statement users needed information about certain limitations on a government s ability to raise resources and for financial reporting purposes requires disclosure on tax abatement information about (1) a reporting government s own tax abatement agreements and (2) those that are entered into by other governments that reduce the reporting government s tax revenues. Statement No. 77 is effective for periods beginning after December 15, The District has elected not to early implement GASB No. 77 and has not determined its effect on the District s financial statements. C) Basis of Presentation The basic financial statements of the Yuima Municipal Water District have been prepared in conformity with accounting principles generally accepted in the United States of America ( GAAP ). The Governmental Accounting Standards Board ( GASB ) is the accepted standard setting body for governmental accounting and financial reporting purposes. These statements require that the financial statements described below be presented: Government-wide Statements: The Government-wide financial statements (i.e., the Statement of Net Position and the Statement of Activities) report information on all of the nonfiduciary activities of the primary government and its component units. For the most part, the effect of inter-fund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are expenses that are clearly identifiable with a specific program, project, function or segment. Program revenues of the District include: 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items that are properly not included among program revenues are reported instead as general revenues. Fund Financial Statements: Separate financial statements are provided for the governmental fund and proprietary fund. D) Measurement Focus, Basis of Accounting and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. 26

47 Notes to Financial Statements Year Ended June 30, ) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued D) Measurement Focus, Basis of Accounting and Financial Statement Presentation - Continued The accounts of the District are organized on the basis of funds and account groups, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, deferred outflows/inflows of resources, fund equity, revenues and expenditures or expenses, as appropriate. District resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The various funds of the primary government are grouped, in the financial statements in this report, into two generic fund types and two broad fund categories as follows: Proprietary Funds are accounted for on the flow of economic resources measurement focus and use the accrual basis of accounting. Under this method, revenues are recorded when earned and expenses are recorded at the time liabilities are incurred. The District has one type of Proprietary Fund, which is an Enterprise Fund. Enterprise Funds are used to account for operations where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability or other purposes. The District maintains one Enterprise Fund, the Water Department, to account for the operations of the District's utility services. Proprietary Funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund s principal ongoing operations. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. Governmental Funds are used to account for the District's Fire activities. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collected within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the District considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Taxes, intergovernmental revenues, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual, and are therefore recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the District. The District has one Special Revenue Governmental Fund, which is the Fire Protection Fund. The Fire Protection Fund is used to account for all financial resources and expenditures used to provide fire protection services within the boundaries of the District. When both restricted and unrestricted resources are available for use, it is the District s policy to use restricted resources first, and then use unrestricted resources as they are needed. 27

48 Notes to Financial Statements Year Ended June 30, ) REPORTING ENTITY AND SIGNIFICANT ACCOUNTING POLICIES - Continued E) Reconciliation Between the Governmental Fund Financial Statements and Government-wide Statements The District has one governmental fund that provides fire protection services through the California Department of Forestry. These services are paid for through special assessments. The District currently has no capital assets, longterm debt or other reconciling items necessary to reconcile between the Governmental fund financial statements and the Government-wide statements. F) Cash and Cash Equivalents For purposes of the statement of cash flows, cash and cash equivalents consists of short-term highly liquid investments with maturities of 90 days or less. G) Investments As a governmental entity other than an external investment pool in accordance with GASB 31, the District's investments are stated at fair value. In applying GASB 31, the District utilized the following methods and assumptions: 1) Fair value is based on quoted market prices as of the valuation date; 2) The portfolio did not hold investments in any of the following: a) Items required to be reported at amortized cost, b) Items in external pools that are not SEC-registered, c) Items subject to involuntary participation in an external pool, d) Items associated with a fund other than the fund to which the income is assigned; 3) Aside from investments clearly identified as belonging to a specific fund, any unrealized gain/loss resulting from the valuation will be recognized within the General Fund to the extent its cash and investments' balance exceeds the cumulative value of those investments subject to GASB 31; 4) The gain/loss resulting from valuation will be reported within the revenue account "investment earnings" on the Statement of Activities and the Statement of Revenues, Expenditures and Changes in Fund Balance for Governmental Funds. For Proprietary Fund Types the gain/loss from valuation will be reported within the investment earnings account on the Statement of Activities and the Statement of Revenues, Expenses and Changes in Net Position for Proprietary Funds. H) Water Sales and Accounts Receivable Water sales revenue is recorded and billed monthly when the service is rendered. During the year ended June 30, 2015, the District reported water sales to one customer which totaled approximately 31.79% as a percentage of consumption. Management has not incurred any additional expense to serve this customer, and the District has more than one source of supply to meet its needs. 28

49 Notes to Financial Statements Year Ended June 30, ) REPORTING ENTITY AND SIGNIFICANT ACCOUNTING POLICIES - Continued I) Allowance for Uncollectible Accounts The District does not provide an allowance for uncollectible accounts. Based upon prior experience and management's assessment of the collectibility of existing specific accounts all past due accounts have been paid. When accounts become past due, they are transferred to the tax roll and eventually collected. J) Unbilled Services Unbilled water services are accrued at year-end. K) Inventory Inventory consists of parts, materials and supplies needed to keep the plant and equipment owned by the District in efficient operating condition to supply water to their customers without interruption of such service. It is valued at cost, and when it is used, it is charged out on the first in, first out basis. Water inventory has been added this fiscal year and is stated at its purchase cost using first in, first out method. L) Capital Assets Capital assets of the District are recorded at cost, or if donated, at approximate value on the date contributed. Contributed assets are recorded at the developer's cost or at the value determined by the developer at the date of contribution. The District does not capitalize interest costs incurred on the construction of capital assets. Capital assets purchased in excess of $2,000 are capitalized if they have an expected useful life greater than one year. Assets are depreciated using the straight-line method over their estimated useful lives as follows: Years General Plant 5-30 Source of Supply Pumping Plant 25 Water Treatment Plant 33 1/3 Transmission and Distribution 33 1/3 M) Compensated Absences It is the District s policy to permit employees to accumulate earned but unused vacation, sick, comp and other leave benefits. Sick leave, upon termination, separation or retirement will be paid out at a rate of 50% of the accumulated balance. All other leave balances are paid 100% upon termination, separation or retirement. The accrued liabilities for compensated absences are reflected in the government-wide and proprietary fund financial statements. Currently, there are no compensated absences associated with the governmental activities. 29

50 Notes to Financial Statements Year Ended June 30, ) REPORTING ENTITY AND SIGNIFICANT ACCOUNTING POLICIES - Continued N) Deferred Outflows/Inflows of Resources In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The District has deferred outflows related to pensions. This includes pension contributions subsequent to the measurement date of the net pension liability and other amounts (see Note 5), which are amortized by an actuarial determined period. In addition to liabilities, the statement of net position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The District has deferred inflows related to pensions. These amounts (see Note 5) are amortized by an actuarial determined period. O) Pensions For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the District s California Public Employees Retirement System (CalPERS) plans (Plans) and additional to/deductions from the Plans fiduciary net position have been determined on the same basis as they are reported by CalPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. P) Net Position GASB No. 63 requires that the difference between assets, liabilities and deferred outflows/inflows of resources be reported as net position. Net position is classified as either net investment in capital assets, restricted, or unrestricted. Net position classified as net investment in capital assets consists of capital assets, net of accumulated depreciation and reduced by the outstanding principal of related debt. Restricted net position is the net position that has external constraints placed on them by creditors, grantors, contributors, laws, or regulations of other governments, or through constitutional provisions, or enabling legislation. Unrestricted net position consists of net position that does not meet the definition of net investment in capital assets or restricted net position. Q) Fund Equity Fund balance in governmental funds are reported in classifications that comprise a hierarchy based primarily on the extent to which the District is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. When both restricted and unrestricted resources are available for use, it is the District's policy to use restricted resources first and then use unrestricted resources as they are needed. Similarly, when an expenditure is incurred for purposes for which amounts in any of the unrestricted classifications of fund balance could be used, the District considers committed amounts to be reduced first, followed by assigned amounts and then unassigned amounts. 30

51 Notes to Financial Statements Year Ended June 30, ) REPORTING ENTITY AND SIGNIFICANT ACCOUNTING POLICIES - Continued Q) Fund Equity - Continued Nonspendable Fund Balance - Includes amounts that cannot be spent because they are either not in spendable form, or, for legal or contractual reasons, must be kept intact. Restricted Fund Balance - Constraints placed on the use of these resources are either externally imposed by creditors (such as through debt covenants), grantors, contributors or other governments; or are imposed by law (through constitutional provisions or enabling legislation). Committed Fund Balance - Amounts that can only be used for specific purposes because of a formal action (ordinance) by the government's highest level of decision-making authority. The Board of Directors is the highest level of decision-making authority for the District that can, by adoption of an ordinance prior to the end of the fiscal year, commit fund balance. Once adopted, the limitation imposed by the ordinance remains in place until a similar action is taken to remove or revise the limitation. Assigned Fund Balance - Amounts that are constrained by the District's intent to be used for specific purposes, but that do not meet the criteria to be classified as restricted or committed. Intent can be stipulated by the governing body, another body, or by an official to whom the authority has been given. The Board of Directors has by resolution the authority to assign fund balance. However, unlike commitments, assignments generally only exist temporarily. In other words, an additional action does not normally have to be taken for the removal of an assignment. Unassigned Fund Balance - These are either residual positive net resources of the General Fund in excess of what can properly be classified in one of the other categories, or negative balances in all other funds. R) Property Tax Property taxes are assessed and collected each fiscal year according to the following property tax calendar: Lien Date January Levy Year July 1 to June 30 Due Dates November 1 1 st Installment February 1 2 nd Installment Delinquent Dates December 10 1 st Installment April 10 2 nd Installment Under California law, property taxes and other charges (such as assessments) are assessed and collected by counties up to 1% of assessed value, plus other increases approved by voters. Property tax revenues are pooled and then allocated to entities based on complex formulas prescribed by state statutes. S) Capitalized Expenses Certain administrative and general expenses, relating to assets under construction, are charged to construction-inprogress until the assets are ready for their intended use. Upon completion of major utility plant additions the capitalized cost is recorded as part of the asset to which it is related and is depreciated over the estimated useful life of the related asset. 31

52 Notes to Financial Statements Year Ended June 30, ) REPORTING ENTITY AND SIGNIFICANT ACCOUNTING POLICIES - Continued T) Use of Estimates The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and necessarily include amounts based on estimates and assumptions by Management. Actual results could differ from those estimates. 2) CASH AND INVESTMENTS Cash and Investments Cash and Investments are classified in the accompanying financial statements as follows: Cash and investments consist of the following: Statement of Net Position: Cash and Investments $ 1,953,514 Cash on Hand $ 500 Deposits with Financial Institutions 1,355,211 Investments 597,803 Total Cash and Investments $ 1,953,514 Investments Authorized by the California Government Code and the District s Investment Policy The table below identifies the investment types that are authorized by the District s investment policy. The table also identifies certain provisions of the California Government Code (or the District s investment policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. Maximum Maximum Authorized Maximum Percentage Investment Investment Type Maturity Of Portfolio (1) In One Issuer Local Agency Bonds 5 years None None U.S. Treasury Obligations 5 years None None U.S. Agency Securities 5 years None None Negotiable Certificates of Deposit 1 year 30% None Local Agency Investment Fund (LAIF) N/A None None JPA Pools (Other Investment Pools) N/A None None (1) Excluding amounts held by bond trustee that are not subject to California Government Code Restrictions. 32

53 Notes to Financial Statements Year Ended June 30, ) CASH AND INVESTMENTS - Continued Disclosures Relating to Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the District manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations. As of June 30, 2015, the District had the following investments: Weighted Average Maturity Maturity Date (Years) State Investment Pool (LAIF) $ 597,803 N/A 0.81 *The District has various non-negotiable Certificates of Deposit with various maturity dates, however, these amounts are considered to be deposits with institutions rather than investments. Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating required by (where applicable) the California Government Code or the District s investment policy, or debt agreements, and the actual rating as of year end for each investment type. Minimum Exempt Rating as of Year End Legal From Not Investment Type Rating Disclosure AAA Aa Rated State Investment Pool (LAIF) $ 597,803 N/A $ $ $ $ 597,803 Concentration of Credit Risk The investment policy of the District contains no limitation on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. As of year end, the District had no investments in any one issuer (other than U.S. Treasury securities, mutual funds, and external investment pools) that represent 5% or more of total District investments. Custodial Credit Risk Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or 33

54 Notes to Financial Statements Year Ended June 30, ) CASH AND INVESTMENTS - Continued Custodial Credit Risk - Continued collateral securities that are in the possession of another party. The California Government Code and the District s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provisions for deposits and investments: The California Government Code requires that a financial institution secure deposits made by state or local government units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure District deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. Negotiable certificates of deposits must be fully insured and have a rating of satisfactory or better. As of June 30, 2015, none of the District s deposits with financial institutions that were in excess of federal depository insurance limits were held in uncollaterized acccounts. Local Agency Investment Fund (LAIF) The yield of LAIF for the quarter ended June 30, 2015 was 0.28%. The estimated amortized cost and fair value of the LAIF Pool at June 30, 2015 was $69,614,988,609 and $69,641,162,418, respectively. The District's share of the Pool at June 30, 2015 was approximately percent. The LAIF is a special fund of the California State Treasury through which local governments may pool investments. It is regulated by California Government Code Section under the oversight of the Treasurer of the State of California. Each district may invest up to $50,000,000 in the Fund. Investments in LAIF are highly liquid, as deposits can be converted to cash within twenty-four hours without loss of interest. Investments in LAIF are secured by the full faith and credit of the State of California. The fair value of the District s investment in this Pool is reported in the accompanying financial statements based upon the District s pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio. The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. Included in LAIF's investment portfolio are certain derivative securities or similar products in the form of asset-backed securities totaling $1,447,948,000. LAIF's (and the District's) exposure to risk (credit, market or legal) is not currently available. 34

55 Notes to Financial Statements Year Ended June 30, ) CAPITAL ASSETS Capital asset activity for the year was as follows: Beginning Ending Balance Increases Decreases Balance Business-type Activities: Capital Assets, Not Depreciated: Land and Improvements $ 1,300,707 $ 750 $ $ 1,301,457 Construction in Progress 89,117 89,117 0 Total Capital Assets Not Depreciated 1,389, ,117 1,301,457 Capital Assets, Being Depreciated: General Plant 1,628, ,202 26,299 1,735,080 Source of Supply 8,679, ,982 98,655 8,997,463 Pumping Plant 3,487,526 62,324 20,842 3,529,008 Water Treatment Plant 144,273 3, ,719 Transmission and Distribution Plant 8,070,469 23,741 25,280 8,068,930 Total Capital Assets Being Depreciated 22,009, , ,076 22,478,200 Less Accumulated Depreciation: General Plant (1,245,966) (81,638) (13,150) (1,314,454) Source of Supply (1,828,483) (173,665) (2,002,148) Pumping Plant (1,266,138) (125,049) (79,629) (1,311,558) Water Treatment Plant (65,096) (3,383) (12,648) (55,831) Transmission and Distribution Plant (4,713,884) (172,008) (8,256) (4,877,636) Total Accumulated Depreciation (9,119,567) (555,743) (113,683) (9,561,627) Total Capital Assets Being Depreciated, Net 12,890,014 83,952 57,393 12,916,573 Business-type Activities Capital Assets, Net of Depreciation $ 14,279,838 $ 84,702 $ 146,510 $ 14,218,030 Depreciation expense was charged to functions/programs of the primary government as follows: Business-type Activities: Water Enterprise $ 555,743 35

56 Notes to Financial Statements Year Ended June 30, ) LONG-TERM LIABILITIES The following is a summary of changes in Business-type Long-term liabilities for the year: Beginning Ending Due Within Description Balance Additions Deletions Balance One Year Compensated Absences (Note 1) $ 215,748 $ 51,897 $ 53,937 $ 213,708 $ 53,427 Net Pension Liability (Note 5) 0 2,658,209 (1) 538,136 2,120,073 Note Payable: 2013 Station 1 Note 99,325 13,043 86,282 12, Station 4 Note 68,252 8,531 59,721 7, Installment Note 2,234, ,317 1,951, ,697 Total $ 2,617,337 $ 2,710,106 $ 895,964 $ 4,431,479 $ 363,038 (1) Included in additions for the Net Pension Liability is a prior period adjustment due to the implementation of GASB Statement No. 68 (see Note 13). Notes Payable Station 1 Note - In August 2012, the District entered into an On-Bill Financing agreement with San Diego Gas & Electric Company for $120,393 with no interest. The imputed interest on the loan was not significant to the note payable. The agreement is to provide financing for Station 1 IDA improvements that will provide energy efficiency savings. The payments are due in monthly installments on the District s utility bills from San Diego Gas & Electric Company of $1,003, commencing September 4, 2012 through September 4, For the Year Ended June 30, Payment 2016 $ 12, , , , , ,087 Total $ 86,282 Notes Payable Station 4 Note - In January 2013, the District entered into an On-Bill Financing agreement with San Diego Gas & Electric Company for $78,753 with no interest. The imputed interest on the loan was not significant to the note payable. The agreement is to provide financing for Station 4 IDA improvements that will provide energy efficiency savings. The payments are due in monthly installments on the District s utility bills from San Diego Gas & Electric Company of $656, commencing February 1, 2013 through February 1,

57 Notes to Financial Statements Year Ended June 30, ) LONG-TERM LIABILITIES - Continued For the Year Ended June 30, Payment 2016 $ 7, , , , , ,346 Total $ 59,721 Notes Payable Installment Note - In July 2013, the District entered into a Loan and Installment Sale agreement with City National Bank for $2,420,000 with interest rate of 2.35% %. The agreement is to provide financing for the refinancing of two installment sale agreements and for the acquisition and construction of a 1.2 million gallon water storage tank and pump station. The payments are due in semiannual installments commencing July 15, 2014 through July 15, The District only borrowed $2,372,463 of the $2,420,000 Installment Note since it made an additional debt service payment on the 2007 Installment Note before it was refinanced. For the Year 2004 Refunding Installment Agreement 2007 Refunding Installment Agreement Ended June 30, Principal Interest Total Principal Interest Total 2016 $ 149,665 $ 4,432 $ 154,097 $ 106,762 $ 22,449 $ 129, , , ,611 19, , ,534 16, , ,536 13, , ,618 10, , ,575 12, , Total $ 225,819 $ 5,327 $ 231,146 $ 873,636 $ 95,448 $ 969,084 For the Year Construction Total Ended June 30, Principal Interest Total Principal Interest Total 2016 $ 33,270 $ 29,962 $ 63,232 $ 289,697 $ 56,843 $ 346, ,462 28,770 63, ,227 49, , ,696 27,536 63, ,230 44, , ,974 26,257 63, ,510 39, , ,298 24,933 63, ,916 35, , , , , , , , ,065 62, , ,065 62, , ,399 14, , ,399 14, ,311 Total $ 852,240 $ 317,546 $ 1,169,786 $ 1,951,695 $ 418,321 $ 2,370,016 37

58 Notes to Financial Statements Year Ended June 30, ) LONG-TERM LIABILITIES - Continued Pledged Revenues The District has pledged a portion of future water activities revenues to repay its 2013 Installment Note payable to City National Bank under the agreement with Municipal Finance Corporation. The note payable is secured solely by operating revenues from the proprietary fund. Total principal and interest remaining on the note payable is $2,370,016 payable through fiscal year For the current year, principal and interest paid by the operating revenues were $282,317 and $64,224, respectively. 5) PENSION PLANS A) General Information about the Pension Plans Plan Descriptions All qualified permanent and probationary employees are eligible to participate in the District s Miscellaneous Employee Pension Plan, a cost-sharing multiple employer defined benefit pension plan administered by the California Public Employees Retirement System (CalPERS). Benefit provisions under the Plans are established by State statute and District resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding provisions, assumptions and membership information that can be found on the CalPERS website. Benefits Provided CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of fulltime employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after 10 years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living adjustments for each plan are applied as specified by the Public Employees Retirement Law. The Plans provisions and benefits in effect at June 30, 2015, are summarized as follows: Miscellaneous Prior to On or After Hire Date January 1, 2013 January 1, 2013 Benefit Formulas 2% at 55 2% at 62 3% at 60 Benefit Vesting Schedule 5 Years Service 5 Years Service Benefit Payments Monthly for Life Monthly for Life Retirement Age Monthly Benefits, as a % of Eligible Compensation 2% - 3% 2.3% Required Employee Contribution Rates 8% 6.25% - 8% Required Employer Contribution Rates % 6.25% % 38

59 Notes to Financial Statements Year Ended June 30, ) PENSION PLANS - Continued A) General Information about the Pension Plans - Continued Contributions Section 20814(c) of the California Public Employees Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for both Plans are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The District is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. For the year ended June 30, 2015, the contributions recognized as part of pension expense for each Plan were as follows: Miscellaneous Contributions - Employer $ 378,037 Contributions - Employee (Paid by Employer) 24,719 B) Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions As of June 30, 2015, the District reported net pension liabilities for its proportionate shares of the net pension liability of each Plan as follows: Proportionate Share of Net Pension Liability Miscellaneous $ 2,120,073 Total Net Pension Liability $ 2,120,073 The District s net pension liability for each Plan is measured as the proportionate share of the net pension liability. The net pension liability of each of the Plans is measured as of June 30, 2014, and the total pension liability for each Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2013 rolled forward to June 30, 2014 using standard update procedures. The District s proportion of the net pension liability was based on a projection of the District s long-term share of contributions to the pension plans relative to the projected contributions of all participating employers, actuarially determined. The District s proportionate share of the net pension liability as of June 30, 2013 and 2014 was as follows: 39

60 Notes to Financial Statements Year Ended June 30, ) PENSION PLANS - Continued B) Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions Continued Miscellaneous Proportion - June 30, % Proportion - June 30, % Change - Increase (Decrease) ( )% For the year ended June 30, 2015, the District recognized pension expense of $268,564. At June 30, 2015, the District s reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows of Resources Deferred Inflows of Resources Pension contributions subsequent to measurement date $ 378,037 $ Differences between actual and expected experience (355,256) Changes in assumptions Change in employer s proportion and differences between the employer s contributions and the employer s Proportionate share of contributions 162,482 (43,021) Net differences between projected and actual earnings on plan investments Total $ 540,519 $ (398,277) $378,037 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, Other amounts reported as deferred outflows of resources and deferred inflow of resources related to pensions will be recognized as pension expense as follows: Year Ended June $ (46,150) 2017 (46,150) 2018 (54,681) 2019 (88,814) 40

61 Notes to Financial Statements Year Ended June 30, ) PENSION PLANS - Continued B) Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions Continued Actuarial Assumptions The total pension liabilities in the June 30, 2013 actuarial valuations were determined using the following actuarial assumptions: Miscellaneous Valuation Date June 30, 2013 Measurement Date June 30, 2014 Actuarial Cost Method Entry-Age Normal Actuarial Assumptions: Discount Rate 7.5% Inflation 2.75% Projected Salary Increase 3.3% % (1) Investment Rate of Return 7.5% (2) Mortality (1) Depending on age, service and type of employment (2) Net of pension plan investment expenses, including inflation The underlying mortality assumptions and all other actuarial assumptions used in the June 30, 2013 valuation were based on the results of a January 2014 actuarial experience study for the period 1997 to Further details of the Experience Study can be found on the CalPERS website. Discount Rate The discount rate used to measure the total pension liability was 7.50% for each Plan. To determine whether the municipal bond rate should be used in the calculation of a discount rate for each plan, CalPERS stress tested plans that would most likely result in a discount rate that would be different from the actuarially assumed discount rate. Based on the testing, none of the tested plans run out of assets. Therefore, the current 7.50 percent discount rate is adequate and the use of the municipal bond rate calculation is not necessary. The long term expected discount rate of 7.50 percent will be applied to all plans in the Public Employees Retirement Fund (PERF). The stress test results are presented in a detailed report that can be obtained from the CalPERS website. According to Paragraph 30 of Statement 68, the long-term discount rate should be determined without reduction for pension plan administrator expense. The 7.50 percent investment return assumption used in this accounting valuation is net of administrative expenses. Administrative expenses are assumed to be 15 basis points. An investment return excluding administrative expenses would have been 7.65 percent. Using this lower discount rate has resulted in a slightly higher Total Pension Liability and Net Pension Liability. CalPERS checked the materiality threshold for the difference in calculation and did not find it to be a material difference. 41

62 Notes to Financial Statements Year Ended June 30, ) PENSION PLANS - Continued B) Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions Continued CalPERS is scheduled to review all actuarial assumptions as part of its regular Asset Liability Management (ALM) review cycle that is scheduled to be completed in February Any changes to the discount rate will require Board action and proper stakeholder outreach. For these reasons, CalPERS expects to continue using a discount rate net of administrative expenses for GASB 67 and 68 calculations through at least fiscal year. CalPERS will continue to check the materiality of the difference in calculation until such time as we have changed our methodology. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds asset classes, expected compound returns were calculated over the short-term (first 10 years) and the longterm (11-60 years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above the rounded down to the nearest one quarter of one percent. The table below reflects the long-term expected real rate of return by asset class. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation. These rates of return are net of administrative expenses. Asset Class New Strategic Allocation Real Return Years 1-10(a) Real Return Years 11+(b) Global Equity 47.0% 5.25% 5.71% Global Fixed Income 19.0% 0.99% 2.43% Inflation Sensitive 6.0% 0.45% 3.36% Private Equity 12.0% 6.83% 6.95% Real Estate 11.0% 4.50% 5.13% Infrastructure and Forestland 3.0% 4.50% 5.09% Liquidity 2.0% -0.55% -1.05% Total 100% (a) An expected inflation of 2.5% used for this period. (b) An expected inflation of 3.0% used for this period. 42

63 Notes to Financial Statements Year Ended June 30, ) PENSION PLANS - Continued B) Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions Continued Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate The following presents the District s proportionate share of the net position liability for each Plan, calculated using the discount rate for each Plan, as well as what the District s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate: Pension Plan Fiduciary Net Position Miscellaneous 1% Decrease 6.50% Net Pension Liability $ 3,087,457 Current Discount Rate 7.50% Net Pension Liability $ 2,120,073 1% Increase 8.50% Net Pension Liability $ 1,317,236 Detailed information about each pension plan s fiduciary net position is available in the separately issued CalPERS financial reports. 6) POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS Plan Description In May 2000, the District Board of Directors approved and adopted a postemployment healthcare plan ("the Retiree Health Benefit Plan") for the benefit of its management employees to be effective July 1, The plan is permitted under Government Code Section et. Seq. The Board of Directors establishes and has the authority to amend the plan provisions. The Board of Directors amended the plan on April 25, 2011 to a defined contribution plan effective July 1, 2011 for new management employees. Participants in the plan as of June 30, 2011 will continue to receive benefits under the defined benefit plan s provisions prior to this amendment. In September 2010, the District established an irrevocable trust fund through the California Public Employees Retiree Benefits Trust (CERBT), an agent multiple-employer postemployment healthcare trust administered by CalPERS, which acts as a common investment and administrative agent for participating public employers within the State of California. CalPERS issues a separate Comprehensive Annual Financial Report. Copies of the CalPERS annual financial report may be obtained from the CalPERS Executive Office, 400 P Street, Sacramento, California

64 Notes to Financial Statements Year Ended June 30, ) POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS - Continued Funding Policy Under the defined contribution plan, contributions to the plan are made solely by the District which are established and may be amended by the Board of Directors. The District contributes 100% of the health insurance premiums for an eligible retirement management employee and spouse, not to exceed: $320 per month for retiree and spouse coverage; $200 per month for retiree only coverage; and $160 per month for retiree's spouse only coverage. The District's contribution toward the health insurance premiums will cease when the retired management employee and spouse reach age 65. For the fiscal year ended June 30, 2015, the District made $111,518 contributions to the Plan representing the District's 2015 annual required contributions to fund the trust. The District, currently, has two retirees receiving benefits from the plan. Annual OPEB Cost and Net OPEB Obligation The District's annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC). The District has elected to calculate the ARC and related information using the alternative measurement method permitted by GASB Statement 45 for employers in plans with fewer than one hundred total plan members. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and to amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the District's annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the District's Net OPEB obligation to the Retiree Health Plan: Annual Required Contribution $ 111,518 Interest on Net OPEB Obligation 0 Adjustments to Annual Required Contribution 0 Annual OPEB Cost (Expense) 111,518 Contributions Made (111,518) Increase (Decrease) in Net OPEB Obligation 0 Net OPEB Obligation - Beginning of Year 0 Net OPEB Obligation - End of Year $ 0 44

65 Notes to Financial Statements Year Ended June 30, ) POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS - Continued Annual OPEB Cost and Net OPEB Obligation - Continued The District s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the Net OPEB obligation for fiscal year 2015 and the two preceding fiscal years were as follows: Fiscal Year Ended THREE-YEAR TREND INFORMATION Annual Percentage of OPEB OPEB Cost Cost Contributed Net Obligation 6/30/13 $ 115, % $ - 6/30/14 $ 110, % $ - 6/30/15 $ 111, % $ - Funded Status and Funding Progress The funded status of the plan as of June 30, 2015, the most recent actuarial valuation date, was as follows: Actuarial Accrued Liability (AAL) $ 1,241,218 Actuarial Value of Plan Assets $ 1,148,134 Unfunded Actuarial Accrued Liability (UAAL) $ 93,084 Funded Ratio (Actuarial Value of Plan Assets/AAL) 92.5% Covered Payroll (Active Plan Members) $ 605,257 UAAL as a Percentage of Covered Payroll 15.4% The projection of future benefit payments for an ongoing plan involves estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Through CERBT, the District is required to perform an actuarial valuation every two years. Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. 45

66 Notes to Financial Statements Year Ended June 30, ) POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS - Continued Methods and Assumptions - Continued The following simplifying assumptions were made: Retirement Age for Active Employees - Based on the historical average retirement age for the covered group, active plan members were assumed to retire at age 65, or at the first year in which the member would qualify for benefits. Marital Status - Marital status of members at the calculation date was assumed to continue throughout retirement. Mortality - Life expectancies were based on mortality tables from the National Center for Health Statistics. The 2010 United States Life Tables for Males and for Females were used. Turnover - Non-group-specific age-based turnover data from GASB Statement 45 were used as the basis for assigning active members a probability of remaining employed until the assumed retirement age and for developing an expected future working lifetime assumption for purposes of allocating to periods the present value of total benefits to be paid. Healthcare Cost Trend Rate - The expected rate of increase in healthcare insurance premiums was based on projections from the National Health Expenditures (NHE) reports issued in July These reports used information from the Office of the Actuary at the Centers for Medicare & Medicaid Services. A rate of 5.8 percent initially, increased to an ultimate rate of 6.5 percent after six years, was used. Health Insurance Premiums health insurance premiums for retirees were used as the basis for calculation of the present value of total benefits to be paid. Inflation Rate - The expected long-term inflation assumption of 4.0 percent was based on the payroll growth rate. Payroll Growth Rate - The expected long-term payroll growth rate was based on an average of the prior ten years. Based on using the CalPERS CERBT Asset Allocation Strategy 1, a discount rate of 7.28 percent was used. In addition, a simplified version of the entry age actuarial cost method was used. The unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on an open basis. The remaining amortization period at June 30, 2015, was thirty years. 7) DEFERRED COMPENSATION PLAN The District offers their employees a deferred compensation plan in accordance with Internal Revenue Code Section 457. The plan is under two investment group contracts, Valic and CalPERS, which offer a variety of variable rates. The plan permits employees to defer a portion of their salary until future retirement years. Eligibility to participate is after six months of service. The plan requires a minimum of $25 per month to be allocated for each option preference. The maximum amount that may be deferred under this plan for the calendar year 2015 was $18,000 per participant and is $17,500 for the calendar year 2014; or up to 25% of gross compensation. 46

67 Notes to Financial Statements Year Ended June 30, ) FIRE MITIGATION FEE PROGRAM On March 20, 1987 the Board of Directors of the District passed Resolution Number effective July 1, 1987 establishing a Fire Mitigation Fee Program. Since that time, the District has annually re-established participation in the program. The Board resolved to participate in the San Diego County s Fire Mitigation Fee Program whereby the District requests the County of San Diego to collect 100% of the ceiling amount of the fire mitigation fee on the District s behalf from applicants for building permits or other permits for development. This percent of ceiling fee is equal to or less than capital facility expansion needs caused by new development. Mitigation fees paid under this program will be used to expand the availability of capital facilities and equipment to serve new development. A separate budget accounting category has been set up on the books of the District to be known as the San Diego County Fire Mitigation Fee Fund. 9) NET POSITION - DESIGNATED In addition to the regulatory restrictions imposed by state law, the Board of Directors by resolution allocated and designated unrestricted net position balances for business-type activities for the following purposes: Beginning Additions Dispositions End of Year Transfers In Transfers Out of Year Customer Rate Stabilization $ 1,152,865 $ 969,502 $ 2,070,868 $ 51,499 Minimum Operating Reserve 785, ,824 32,969 Continuing Capital Projects 318, , ,521 Vehicle Replacement 15,745 15,745 0 Employee Benefit Requirements 215, ,748 0 Total $ 2,488,978 $ 969,502 $ 3,174,491 $ 283,989 *Note: Reserves were reduced by $2,120,073 for the net pension liability (implementing GASB 68 as of June 30, 2015). 10) JOINT VENTURE On June 18, 1976, the District entered into a joint powers agreement for fire protection services with Pauma Municipal Water District and Mootamai Municipal Water District. The fire protection services are provided by the California Department of Forestry and Fire Protection (CALFIRE). The District under the agreement is responsible for administrating these services and determining each district s proportionate share. This activity is reflected in the financial statements in the fire protection governmental fund. 11) RISK MANAGEMENT The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The District is a member of Association of California Water Agencies Joint Powers Insurance Authority (JPIA). The JPIA is a risk-pooling self-insurance authority, created under provisions of California Government Code Sections

68 Notes to Financial Statements Year Ended June 30, ) RISK MANAGEMENT - Continued et. seq. The purpose of JPIA is to arrange and administer programs of insurance for the pooling of self-insured losses and to purchase excess insurance coverage from commercial insurance carriers to reduce its exposure to large losses. The District pays annual premiums for its liability (auto, general, and public officials), property loss, workers compensation, and fidelity bond coverage. They are subject to retrospective adjustments based on claims experience. The nature and amounts of these adjustments cannot be estimated and are charged or credited to expense as invoiced. The District s insurance expense for year ended June 30, 2015 was $38,613. There were no instances in the past three years where a settlement exceeded the District s coverage. 12) COMMITMENTS AND CONTINGENCIES Legal On May 17, 2013, the Rancho Pauma Mutual Water Company filed suit against the District in Superior Court to enforce certain claimed rights under a case entitled Peter Michael Strub, et al. v Palomar Mutual Water Company. Rancho Pauma and the District are, respectively, successors in interest to the original parties named above in this case, which was decided over sixty years ago and over which the Superior Court has retained continuing jurisdiction. Rancho Pauma asserts that the original decision, as subsequently modified, forbids, inter alia, the District from taking more than 1,350 acre-feet per year from a defined groundwater basin in Pauma Valley for use anywhere within the boundaries of the District. The District maintains that the Strub case applies only to usage within the former boundaries of the Palomar Mutual Water Company, which is now incorporated in the District as Improvement District A ( IDA ). In a Superior Court ruling dated November 15, 2013 and entitled Order Granting in Part and Denying in Part Petition to Enforce Water Rights Judgment, and Statement of Decision, Superior Court Judge Richard Dahlquist ruled that Strub et. al. v Palomar imposes a hard cap of 1,350 acre-feet per year, regardless of where within the boundaries of the District such water is ultimately used. On May 29, 2014, Yuima appealed that ruling and the case is now before the Fourth District Court of Appeal. If the case is ultimately decided against the District, the probable result will be an increase in the total amount of imported water that the District will need to import to satisfy the demands of its non-ida customers and a correlative increase in costs leading to an increase in water rates. Economic Dependency For fiscal year ended June 30, 2015, 62.3% of water sold by the District is purchased from the San Diego Water Authority and 37.7% is produced or purchased from local groundwater sources. All electricity used by the District for pumping and operations is purchased from San Diego Gas and Electric. 13) PRIOR PERIOD ADJUSTMENT The Statement of Net Position for the Government-Wide and Proprietary Fund financial statements include a $2,087,305 prior period adjustment. As part of the implementation of GASB Statements 68 and 71, the beginning net position was adjusted to record $2,447,674 for the beginning net pension liability and $360,369 to record pension contributions subsequent to the actuarial measurement date (deferred outflows of resources) from the prior year. 48

69 REQUIRED SUPPLEMENTARY INFORMATION

70

71 Schedule of the District s Proportionate Share of the Net Pension Liability CalPERS Miscellaneous Pension Plan Last Ten Years* As of June 30, Proportion of the Net Pension Liability 0.03% Proportionate Share of the Net Pension Liability $ 2,120,073 Covered - Employee Payroll $ 1,093,443 Proportionate Share of the Net Position Liability as Percentage of Covered-Employee Payroll % Plan s Fiduciary Net Position $ 5,171,980 Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 70.93% Notes to Schedule: Benefit Changes. In 2015, there was no benefit terms modified. Changes in Assumptions. In 2015, amounts reported as changes in assumptions results primarily from adjustments to expected retirement ages of general employees. *- Fiscal year 2015 was the 1 st year of implementation, therefore only one year is shown. 49

72 Schedule of Contributions CalPERS Miscellaneous Pension Plan Last Ten Years* As of June 30, Contractually Required Contribution (actuarially determined) $ 378,037 Contributions in Relation to the Actuarially determined contribution (378,037) Contribution Deficiency (excess) $ 0 Covered-employee Payroll $ 1,093,433 Contributions as a Percentage of Coveredemployee Payroll 34.57% Notes to Schedule: Valuation Date 6/30/2012 Methods and assumptions used to determine contribution rates: Actuarial Cost Method Entry Age Normal Cost Method Amortization Method Level Percent of Payroll Average Remaining Period 19 Years as of the Valuation Date Asset Valuation Method 15 Year Smoothed Market Discount Rate 7.50% Salary Increases Various by entry age and service Inflation 2.75% Payroll Growth 3.00% Individual Salary Growth A merit scale varying by duration of employment coupled with an assumed annual inflation growth of 2.75% and an annual production growth of 0.25%. *- Fiscal year 2015 was the 1 st year of implementation, therefore only one year is shown. 50

73 Schedule of Funding Progress for OPEB Year Ended June 30, 2015 The table below shows a three-year analysis of the actuarial value of assets as a percentage of the actuarial accrued liability and the unfunded actuarial liability as a percentage of annual covered payroll as of June 30: Required Supplementary Information Schedule of Funding Progress - Retiree Health Benefit Plan Actuarial Unfunded (Assets Actuarial Accrued Unfunded In Excess of) AAL Actuarial Value of Liability (AAL) (Assets in Funded Covered as a Percentage of Valuation Assets Entry Age Excess of) AAL Ratio Payroll Covered Payroll Date (a) (b) (b-a) (a/b) (c) (b-a)/c June 30, 2011 $ 553,428 $ 1,213,410 $ 659, % $ 509, % June 30, 2013 $ 822,227 $ 1,355,558 $ 533, % $ 541, % June 30, 2015 $ 1,148,134 $ 1,241,218 $ 93, % $ 605, % 51

74 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - Governmental Fund Type - Fire Protection Year Ended June 30, 2015 Variance Budgeted Amounts Actual Favorable Original Final Amounts (Unfavorable) REVENUES Fire Protection Special Tax $ 50,100 $ 50,100 $ 54,663 $ 4,563 Mitigation Fees 2,175 2,175 Contributions 199, ,655 (199,655) Investment Earnings Grants 8,000 8,000 79,495 71,495 Total Revenues 257, , ,347 (121,408) EXPENDITURES General and Administration 2,500 2,500 3,567 (1,067) Fire Protection 257, ,755 78, ,516 Total Expenditures 260, ,255 81, ,449 Excess of Revenues Over Expenditures $ (2,500) $ (2,500) 54,541 $ 57,041 Fund Balance - Beginning of Year 60,942 Fund Balance - End of Year $ 115,483 52

75 Notes to Required Supplementary Information Year Ended June 30, BUDGETARY DATA The budget process begins in March with input from staff with a series of goals and objectives in mind. The General Manager and Department Heads discuss the budget process and departments submit budget requests. Budget requests are refined by the Department Heads and approved by the General Manager. Following a series of Finance Committee meetings with the Board of Directors a program is presented that is fiscally sound, prudent, and necessary for the continued efficient operation of the District during the coming year. The proposed budget is then presented to the Board of Directors for review and ultimate approval in June. The appropriated budget is prepared by fund and object which is reflected in the budget to actual schedule on page 52. The General Manager may make transfers of appropriations within the fund up to $15,000. Any other changes, requires the approval of the Board of Directors. The legal level of budgetary control (i.e., the level at which expenditures may not legally exceed appropriations) is the object level (salaries and wages, purchased water, etc.). 53

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77 STATISTICAL SECTION This part of the Yuima Municipal Water District comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the District s overall financial health. CONTENTS PAGE Financial Trends These schedules contain trend information to help the reader understand how the District s financial performance and well-being have changed over time. 54 Revenue Capacity These schedules contain information to help the reader assess the District s most significant local revenue source, water sales. 61 Debt Capacity These schedules present information to help the reader assess the affordability of the District s current levels of outstanding debt and the District s ability to issue additional debt in the future. 67 Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the District s financial activities take place. 71 Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the District s financial report relates to the services the District provides and the activities it performs. 74

78 Net Position by Component Last Ten Fiscal Years Page 1 of 2 Fiscal Year Governmental Activities: Net Investment in Capital Assets $ - $ - $ - $ - $ - Restricted Unrestricted 115,483 60,942 1,512 (141) 7,628 Total Governmental Activities Net Position $ 115,483 $ 60,942 $ 1,512 $ (141) $ 7,628 Business - type Activities Net Investment in Capital Assets $ 12,120,332 $ 11,878,249 $ 11,224,659 $ 10,954,646 $ 10,441,399 Restricted Unrestricted 283,989 2,488,978 4,491,741 4,503,571 3,673,419 Total Business-type Activities Net Position $ 12,404,321 $ 14,367,227 $ 15,716,400 $ 15,458,217 $ 14,114,818 Primary Government Net Investment in Capital Assets $ 12,120,332 $ 11,878,249 $ 11,224,659 $ 10,954,646 $ 10,441,399 Restricted Unrestricted 399,472 2,549,920 4,493,253 4,503,430 3,681,047 Total Primary Government Net Position $ 12,519,804 $ 14,428,169 $ 15,717,912 $ 15,458,076 $ 14,122,446 Primary Government Net Position $15,000,000 $12,000,000 $9,000,000 $6,000,000 $3,000,000 $ Fiscal Year Net Investment in Capital Assets Restricted Unrestricted Source: Yuima Municipal Water District Notes: The District's assets consist primarily of water treatment and distribution facilities. 54

79 Net Position by Component Last Ten Fiscal Years Page 2 of 2 Fiscal Year Governmental Activities: Net Investment in Capital Assets $ - $ - $ - $ - $ - Restricted Unrestricted 10,276 14, , , ,557 Total Governmental Activities Net Position $ 10,276 $ 14,997 $ 250,617 $ 241,565 $ 226,557 Business - type Activities Net Investment in Capital Assets $ 9,851,232 $ 11,745,488 $ 9,297,688 $ 8,947,575 $ 8,295,589 Restricted Unrestricted 3,594,996 3,833,288 5,209,324 5,046,011 5,303,896 Total Business-type Activities Net Position $ 13,446,228 $ 15,578,776 $ 14,507,012 $ 13,993,586 $ 13,599,485 Primary government Net Investment in Capital Assets $ 9,851,232 $ 11,745,488 $ 9,297,688 $ 8,947,575 $ 8,295,589 Restricted Unrestricted 3,605,272 3,848,285 5,459,941 5,287,576 5,530,453 Total Primary Government Net Position $ 13,456,504 $ 15,593,773 $ 14,757,629 $ 14,235,151 $ 13,826,042 Primary Government Net Position $15,000,000 $12,000,000 $9,000,000 $6,000,000 $3,000,000 $ Fiscal Year Net Investment in Capital Assets Restricted Unrestricted Source: Yuima Municipal Water District Notes: The District's assets consist primarily of water treatment and distribution facilities. 55

80 Fiscal Year Expenses Governmental Activities: Fire Protection $ 81,806 $ 5,486 $ 149,968 $ 214,549 $ 235,432 Total Governmental Activities Expenses 81,806 5, , , ,432 Business-type activities: Water Activities 11,625,791 12,972,013 8,462,595 6,312,177 6,535,139 Interest on Long-term Debt Total Business-type Activities Expenses 11,625,791 12,972,013 8,462,595 6,312,177 6,535,139 Total Primary Government Expenses $ 11,707,597 $ 12,977,499 $ 8,612,563 $ 6,526,726 $ 6,770,571 Program Revenues Governmental Activities: Charges for Services - Fire Protection $ 56,838 $ 55,052 $ 51,288 $ 51,406 $ 49,763 Operating Grants & Contributions - Fire Protection 1,650 92, , ,094 Capital Grants and Contributions - Fire Protection 79, Total Governmental Activities Program Revenues 136,333 56, , , ,857 Business-type Activities: Charges for Services - Water Activities 11,260,495 11,177,486 8,438,943 7,196,652 6,763,277 Operating Grants & Contributions - Water Activities Capital Grants & Contributions - Water Activities Total Business-type Activities Program Revenues 11,260,495 11,177,486 8,438,943 7,196,652 6,763,277 Total Primary Government Program Revenues $ 11,396,828 $ 11,234,188 $ 8,583,073 $ 7,394,917 $ 6,987,134 Net (Expense)/Revenue Governmental Activities $ 54,527 $ 51,216 $ (5,838) $ (16,284) $ (11,575) Business-type Activities (365,296) (1,794,527) (23,652) 884, ,138 Total Primary Government Net (Expense)/Revenue $ (310,769) $ (1,743,311) $ (29,490) $ 868,191 $ 216,563 General Revenues and Other Changes in Net Position Governmental Activities: Property Taxes $ - $ - $ - $ - $ - Investment Earnings Other 8,203 7,480 8,502 8,905 Total Governmental Activities 14 8,214 7,491 8,515 8,927 Business-type Activities: Property Taxes 396, , , , ,507 Investment Earnings 22,582 34,020 44,587 39,395 46,694 Other 71,076 33,188 3,477 31,258 12,251 Special Item - - (139,224) - - Total Business-type Activities 489, , , , ,452 Total Primary Government $ 489,709 $ 453,568 $ 289,326 $ 467,439 $ 449,379 Change in Net Position Governmental Activities $ 54,541 $ 59,430 $ 1,653 $ (7,769) $ (2,648) Business-type Activities 124,399 (1,349,173) 258,183 1,343, ,590 Total Primary Government $ 178,940 $ (1,289,743) $ 259,836 $ 1,335,630 $ 665,942 Source: Yuima Municipal Water District Yuima Municipal Water District Changes in Net Position Last Ten Fiscal Years Page 1 of 2 56

81 Fiscal Year Expenses Governmental Activities: Fire Protection $ 221,085 $ 342,006 $ 144,288 $ 55,288 $ 98,633 Total Governmental Activities Expenses 221, , ,288 55,288 98,633 Business-type activities: Water Activities 7,667,445 6,629,393 7,386,450 7,334,519 6,001,789 Interest on Long-term Debt - 111,912 90,019 46,529 50,652 Total Business-type Activities Expenses 7,667,445 6,741,305 7,476,469 7,381,048 6,052,441 Total Primary Government Expenses $ 7,888,530 $ 7,083,311 $ 7,620,757 $ 7,436,336 $ 6,151,074 Program Revenues Governmental Activities: Charges for Services $ 51,727 $ 55,855 $ 51,000 $ 61,585 $ 59,070 Operating Grants and Contributions 155,075 34,840 87,926-46,236 Capital Grants and Contributions Total Governmental Activities Program Revenues 206,802 90, ,926 61, ,306 Business-type Activities: Charges for Services 6,815,249 6,811,581 6,918,807 6,675,823 5,736,423 Operating Grants and Contributions Capital Grants and Contributions - 440, , Total Business-type Activities Program Revenues 6,815,249 7,251,852 7,089,627 6,675,823 5,736,423 Total Primary Government Program Revenues $ 7,022,051 $ 7,342,547 $ 7,228,553 $ 6,737,408 $ 5,841,729 Net (Expense)/Revenue Governmental Activities $ (14,282) $ (251,311) $ (5,362) $ 6,297 $ 6,673 Business-type Activities (852,196) 510,547 (386,842) (705,225) (316,018) Total Primary Government Net (Expense)/Revenue $ (866,478) $ 259,236 $ (392,204) $ (698,928) $ (309,345) General Revenues and Other Changes in Net Position Governmental Activities: Property Taxes $ - $ - $ - $ - $ - Investment Earnings 38 1,905 8,754 8,711 6,234 Other 9,523 13,786 5, Total Governmental Activities 9,561 15,691 14,414 8,711 6,234 Business-type Activities: Property Taxes 396, , , , ,676 Investment Earnings 60, , , , ,715 Other 5,717 1,332 16, , ,286 Special Item (1,743,195) Total Business-type Activities (1,280,352) 561, ,552 1,099, ,677 Total Primary Government $ (1,270,791) $ 576,908 $ 697,966 $ 1,108,037 $ 610,911 Change in Net Position Governmental Activities $ (4,721) $ (235,620) $ 9,052 $ 15,008 $ 12,907 Business-type Activities (2,132,548) 1,071, , , ,659 Total Primary Government $ (2,137,269) $ 836,144 $ 305,762 $ 409,109 $ 301,566 Source: Yuima Municipal Water District Yuima Municipal Water District Changes in Net Position Last Ten Fiscal Years Page 2 of 2 57

82 Fund Balances of Governmental Funds Last Ten Years Fiscal GOVERNMENTAL FUNDS Total Total Year General (1) Fire Total Reserved Unreserved Ended Fund Fund Balance Balance Balance 2015 $ - $ 115,483 $ 115,483 $ - $ 115, ,942 60,942-60, ,512 1,512-1, (141) (141) - (141) ,628 7,628-7, ,276 10,276-10, (2) - 14,997 14,997-14, , , , , , , , , ,557 Fire Fund Balance 300, , , , ,000 50, Fiscal Year Source: Yuima Municipal Water District Notes: (1) The District does not have a governmental type general fund. (2) The Fire Mitigation Fee project consisted of building a Fire Apparatus Bay at the Cal Fire CDF location. The project was completed at a total cost of $268,000. It was funded as a joint project with Yuima, Pauma, and Mootamai Municipal Water Districts. 58

83 Changes in Fund Balances of Governmental Fund Last Ten Fiscal Years Page 1 of 2 Fiscal Year 2015 (1) 2014 (2) Revenues Fire Protection Special Tax $ 54,663 $ 50,715 $ 50,715 $ 50,688 $ 48,968 Mitigation Fees 2,175 4, Contributions 72,000 1,650 92, , ,094 Investment Earnings Miscellaneous (EMS Funds) 7,495 8,203 7,480 8,502 8,905 Total Revenues 136,347 64, , , ,784 Expenditures General and Administrative 3,567 3,835 2,431 2,591 3,800 Capital Expenditures Fire Protection 78,239 1, , , ,632 Total Expenditures 81,806 5, , , ,432 Net Change in Fund Balances $ 54,541 $ 59,430 $ 1,653 $ (7,769) $ (2,648) Source: CAFR - Statement of Revenues, Expenditures and Changes in Fund Balance - Government Funds Notes: (1) CalFire did not call a "Non-Fire Season in Fiscal Year , therefore no fire contract charges were incurred during this reporting period. A contribution was received (and expended) for the purchase of two emergency extraction devices ("Jaws of Life") during the fiscal year (2) CalFire did not call a "Non-Fire Season" in fiscal year , therefore no fire contract charges or contributions were incurred during this reporting period. The Fire Fund has no related debt and therefore has no debt expenditures or ratio presented. 59

84 Changes in Fund Balances of Governmental Fund Last Ten Fiscal Years Page 2 of 2 Fiscal Year Revenues Fire Protection Special Tax $ 51,059 $ 51,502 $ 49,555 $ 48,671 $ 48,671 Mitigation Fees 668 4,533 1,445 12,914 10,399 Contributions 155, , ,350-46,236 Investment Earnings 38 1,905 8,754 8,711 6,234 Miscellaneous 9,523 13,786 5, Total Revenues 216, , ,764 70, ,540 Expenditures General and Administrative 5,589 3,428 2,274 5,773 5,992 Capital Expenditures - 268, Fire Protection 215, , ,654 49,515 92,641 Total Expenditures 221, , ,928 55,288 98,633 Net Change in Fund Balances $ (4,721) $ (267,314) $ 11,836 $ 15,008 $ 12,907 Source: CAFR - Statement of Revenues, Expenditures and Changes in Fund Balance - Government Funds Notes: The Fire Fund has no related debt, therefore no debt expenditures or ratio is presented. 60

85 Commodity Charges and Base Charges Last Ten Fiscal Years Commodity Charges Fiscal Agricultural Water Domestic Water Average Average Year Rate (per acre foot) Rate (per acre foot) Annual Pumping Charge Annual Ended Yuima IDA Yuima IDA Increase Yuima IDA (Range) Increase $ 1,046 $ 777 $ 1,202 $ 777 7% $ 96 $ 70 $ 338 0% $ 978 $ 727 $ 1,123 $ 727 4% $ 96 $ 70 $ 338 5% 2013 $ 966 $ 715 $ 982 $ 722 0% $ 91 $ 67 $ 321 0% 2012 $ 966 $ 715 $ 982 $ 722-4% $ 91 $ 67 $ 321 0% 2011 $ 966 $ 727 $ 1,066 $ % $ 91 $ 67 $ 321 5% 2010 $ 854 $ 646 $ 927 $ % $ 87 $ 64 $ 307 0% 2009 $ 742 $ 562 $ 848 $ % $ 87 $ 64 $ 307 7% 2008 $ 669 $ 506 $ 764 $ % $ 81 $ 60 $ % 2007 $ 608 $ 460 $ 695 $ 509 8% $ 74 $ 54 $ 261 4% 2006 $ 563 $ 426 $ 649 $ % $ 71 $ 52 $ 251 0% Base Charges Fiscal Monthly Meter Charge by Meter Size Average Year Annual Ended 5/8" 1" 1¼" & 1½" 2" 3" 4" 5" 6" 8" Increase $ 31 $ 49 $ 92 $ 159 $ 294 $ 502 $ 711 $ 919 $ 1,593 7% 2014 $ 29 $ 46 $ 86 $ 149 $ 275 $ 469 $ 664 $ 859 $ 1,488 0% 2013 $ 29 $ 46 $ 86 $ 149 $ 275 $ 469 $ 664 $ 859 $ 1,488 7% 2012 $ 27 $ 43 $ 80 $ 139 $ 257 $ 439 $ 621 $ 803 $ 1,391 7% 2011 $ 25 $ 40 $ 75 $ 130 $ 240 $ 410 $ 580 $ 744 $ 1,300 7% 2010 $ 23 $ 37 $ 70 $ 122 $ 224 $ 383 $ 542 $ 695 $ 1,215 7% 2009 $ 22 $ 35 $ 66 $ 114 $ 210 $ 358 $ 507 $ 650 $ 1,136 10% 2008 $ 20 $ 32 $ 60 $ 103 $ 191 $ 326 $ 461 $ 591 $ 1,032 10% 2007 $ 18 $ 29 $ 54 $ 94 $ 173 $ 296 $ 419 $ 542 $ 939 0% 2006 $ 18 $ 29 $ 54 $ 94 $ 173 $ 296 $ 419 $ 542 $ % Source: Yuima Municipal Water District Notes: (1) Effective July 1, 2014, the Board approved a 7 % increase in the base water rate and the monthly meter fee. (2) Effective November 1, 2013, the Board approved a tiered structure. The stated water rates for 2014 represent Tier 1. The District annually performs a water rate study to determine the new water rates for the following fiscal year. The rate calculations begin with a determination of the total amount of revenue required and represent a balance between a fixed charge for each meter and a variable charge for the volume of water used by each customer. The allocation of revenue between base (fixed) charges and commodity (variable) charges is determined by the Board and are based upon the desired percentage of revenue to be derived from fixed and variable sources of income. Typically, 70-75% of revenue is derived from commodity charges and the remainder from the base charges. 61

86 Water Sold by Type of Customer Last Ten Fiscal Years Fiscal Year Ended Yuima and IDA Combined Total Average (1) (2) Agricultural Domestic Wholesale Ag/Dom Total Water Sales Rainfall (3) District Value Acre Feet Value Acre Feet Value Acre Feet Value Acre Feet (inches) Rate (4) 2015 $ 5,410,989 6,167 $ 125, $ 1,033, $ 6,569,670 7, $ ,468,903 6, , , ,984,789 7, ,480,984 6, , , ,752,817 6, ,998,764 5,318 98, , ,145,011 5, ,570,935 4, , , ,788,717 4, ,273,868 4,853 97, , ,653,265 5, ,137,544 5, , , ,564,496 5, ,739,344 5,221 96, , ,836,266 6, ,069,972 6,566 85, , ,538,628 7, ,501,099 5, , , ,927,594 6, Water Sold by Type of Customer 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000, Fiscal Year Agricultural Domestic Wholesale Source: Yuima Municipal Water District Notes: (1) Yuima s primary and only significant revenue source is retail water sales. The proportion of customer type that makes up the revenue base has remained relatively unchanged for the time frame presented. Agricultural and Wholesale water customers make up the largest section of the revenue base. Consequently, demand peaks sharply during dry years when irrigation requirements are greatest and drops during wet years. As a result in fiscal years of higher rainfall a corresponding dip in Total Acre Feet Sold can be seen. (2) (3) Although revenue by customer type is not presented separately on the face of the financial statements, these revenues are recorded separately in the District s general ledger for tracking purposes. Rainfall is measured at the "Johnson" property located at the top of Quail Drive, Pauma Valley, California at an elevation of 2,055 ft. (4) Calculated average rate. See page 61 for actual rates. 62

87 Water Purchased and Produced Last Ten Fiscal Years Fiscal Yuima & IDA Combined (Acre Feet) Percent Percent Year Ground Imported Total Water Ground Imported Ended Water (1) Water Produced Water Water , , , % 62% , , , % 59% , , , % 34% , , , % 21% , , , % 33% , , , % 47% , , , % 39% , , , % 59% , , , % 47% , , , % 51% Water Purchased and Produced 5, , , , , Fiscal Year Ground Water Imported Water Source: Yuima Municipal Water District Notes: (1) Ground Water figures include production in IDA past the master meter and well agreements. 63

88 Principal Water Consumers For the Fiscal Years 2015 and 2006 Yuima & IDA Customer Accounts Yuima & IDA Customer Accounts FISCAL YEAR ENDED 2015 FISCAL YEAR ENDED 2006 Usage in Percent of Usage in Percent of Customer Name (1) Acre Feet Water Sold Customer Name (1) Acre Feet Water Sold Pauma Mtn. Ranch/Pauma Ranches 2, % Pauma Mtn. Ranch/Pauma Ranches 1, % Val Vista % Pauma Ridge % Rancho Eugenio % Rancho Eugenio % T-Y Nursery % Val Vista % Pauma Ridge Mutual Water Co % Humason % Burge % House % Rancho Pauma Mutual Water Co % Brothers Nursery % Humason % Metta Forrest % PKB Farms % PKB Farms % House % Starbeam Ranch % Total Top Ten Consumers 5, % Total Top Ten Consumers 4, % Other Consumers 2, % Other Consumers % Total Water Billed 7, % Total Water Billed 5, % All Other Users 30% Fiscal Year Fiscal Year All Other Users 15% Ten Largest Users 70% Ten Largest Users 85% Source: Yuima Municipal Water District Notes: (1) The District s service area has been established for many years, and with a relatively stable local economy has seen few changes to the customer base. This stability is reflected in the similarities between the current list of the largest water customers and the list from ten years ago. 64

89 Property Tax and Assessment Levies Last Ten Years Yuima & IDA Combined Fiscal CURRENT YEAR LEVY Total Net Percent Year Property Special Total Collections Uncollected Uncollected Ended Taxes (1) Assessments (2) Levy Thru 6/30 at 6/30 at 6/ $ 407,230 $ 82,145 $ 489,375 $ 468,903 $ 20, % ,181 79, , ,072 11, % ,568 79, , ,602 8, % ,069 75, , ,391 9, % ,942 80, , ,785 3, % ,664 80, , ,070 3, % ,201 76, , ,455 4, % ,916 80, , ,943 2, % ,864 84, , ,203 4, % ,497 67, , ,862 4, % Property Tax Levies and Collections $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $ Fiscal Year Tax Levies Collections Source: Yuima Municipal Water District and the Office of the Auditor Controller, County of San Diego Notes: (1) Property taxes represent a portion of the county 1% general tax rate. In Fiscal Years 2005 and 2006, the District experienced a loss of property tax revenues as part of the ERAF shift. (2) Special Assessments represent $10 per acre water availability charge assessed on all taxable acreage in the District not otherwise deferred. 65

90 Assessed Value of Taxable Property Last Ten Years Yuima & IDA Combined Fiscal SECURED Total Assessed Year Real Personal Secured Tax Ended Property Property Exemptions Value Rate (1) 2015 $ 350,573,903 $ - $ (6,342,541) 344,231, ,012,925 - (5,447,031) 333,565, ,486,315 - (5,381,025) 327,105, ,909,035 1,186,264 (5,030,895) 327,064, ,764,210 1,153,515 (5,036,834) 333,880, ,734,024 4,232 (5,005,225) 335,733, ,425,192 4,789 (5,011,283) 349,418, ,363,468 5,223 (5,179,025) 377,189, ,563,364 7,095 (4,922,806) 361,647, ,950,169 7,221 (4,906,718) 310,050,672 - Assessed Value of Taxable Property 400,000, ,000, ,000, ,000, ,000, ,000, ,000,000 50,000, Fiscal Year Assessed Value Source: Yuima Municipal Water District and the Office of the Auditor Controller, County of San Diego Notes: (1) The District does not assess a tax rate. However, the District receives its proportionate share of property taxes levied by the County of San Diego in accordance with Proposition

91 Ratios of Outstanding Debt by Type Last Ten Fiscal Years Fiscal General Percentage Year Obligation Revenue Term Number of Debt per of Personal Debt per Ended Bonds (1) Bonds (2) Loans Total Meters (3) Meter Income (4) Population (5) Capita 2015 $ - $ - $ 2,097,698 $ 2,097, $ 6,281 1% 1,336 $ 1, ,401,589 2,401, ,190 2% 1,336 1, ,689,688 1,689, ,014 1% 1,336 1, ,726,799 1,726, ,079 1% 1,336 1, ,941,586 1,941, ,677 1% 1,336 1, ,147,912 2,147, ,280 2% 1,336 1, ,346,111 2,346, ,860 2% 1,359 1, ,536,509 2,536, ,527 2% 1,359 1, ,184,880 1,184, ,526 1% 1, ,293,825 1,293, ,897 1% 1, ,398,817 1,398, ,213 1% 1,359 1,029 Outstanding Debt $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $ Fiscal Year Source: Yuima Municipal Water District Notes: (1) The District has not issued any General Obligation Bonds to date. (2) The District has not issued any Revenue Bonds to date. (3) Yuima Meters = 102; IDA Meters =232 (4) See San Diego County Demographic and Economic Statistics Schedule. Personal Income for San Diego County was used since information for the District is unavailable. (5) Population data provided by the San Diego Association of Governments (SANDAG), constructed from 2000 and 2010 U.S. Census Bureau. 67

92 Revenue Debt Coverage Last Ten Fiscal Years Page 1 of 2 Yuima & IDA Combined Fiscal Less: Net Revenue Year Operating Nonoperating Gross Operating Available for Ended Revenues Revenues Revenues (2) Expenses (3) Debt Service 2015 $ 10,885,303 $ 864,887 $ 11,750,190 $ 10,959,302 $ 790, (4) 10,924, ,161 11,622,840 12,151,833 (528,993) ,192, ,506 8,860,002 7,744,637 1,115, ,963, ,148 7,655,576 5,733,775 1,921, ,515, ,176 7,203,729 5,955,611 1,248, ,517, ,100 7,278,092 7,062, , ,126,513 1,246,285 7,372,798 6,039,540 1,333, ,519,290 1,083,069 7,602,359 6,912, , ,675,823 1,169,622 7,845,445 6,927, , ,736, ,677 6,341,100 5,646, ,240 Source: Notes: Yuima Municipal Water District (1) Computation excludes fire fund revenues. (2) The transactions to record depreciation expense are not included in Total Expenses. (3) Includes Municipal Finance Corporation Loans. See Note 4 to the financial statements. (4) Principal & Interest figures in 2014 are shown net of refinance. (5) 2014 Principal & Interest correction 68

93 Revenue Debt Coverage Last Ten Fiscal Years Page 2 of 2 Yuima & IDA Combined DEBT SERVICE REQUIREMENTS Pledged Coverage Revenue Principal Interest Total (4) Factor Debt Limit $ 282,317 $ 64,224 $ 346, % 115% 183,766 (5) 59, , % 115% 223,600 81, , % 225% 214,787 80, , % 225% 206,325 89, , % 225% 160,393 86, ,267 87% 125% 192, , , % 125% 184,505 82, , % 125% 108,945 47, , % 125% 104,992 51, , % 125% Source: Yuima Municipal Water District Notes: (1) Computation excludes fire fund revenues. (2) The transactions to record depreciation expense are not included in Total Expenses. (3) Includes Municipal Finance Corporation Loans. See Note 4 to the financial statements. (4) Principal & Interest figures in 2014 are shown net of refinance. (5) 2014 Principal & Interest correction. 69

94 Computation of Direct and Overlapping Debt June 30, Assessed Valuation: $ 340,220,015 Total Debt District's Share of DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: 6/30/2015 % Applicable (1) Debt 6/30/14 Metropolitan Water District $ 110,420, % $ 16,563 Palomar Community College District 515,523, % $ 1,763,092 Palomar Pomerado Hospital District 471,441, % $ 2,352,493 Yuima Municipal Water District % 0 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $ 4,132,148 OVERLAPPING GENERAL FUND DEBT San Diego County General Fund Obligations $ 351,670, % $ 284,853 San Diego County Pension Obligations 682,615, % $ 552,918 San Diego County Superintendent of Schools Certificates of Participation 14,732, % $ 11,933 Palomar Community College District General Fund Obligation 4,350, % $ 14,877 TOTAL OVERLAPPING GENERAL FUND DEBT $ 864,581 TOTAL DIRECT DEBT $ - TOTAL OVERLAPPING DEBT $ 4,996,729 COMBINED TOTAL DEBT $ 4,996,729 (2) (1) The percentage of overlapping debt applicable to the district is estimated using taxable assessed property value. Applicable percentages were estimated by determining the portion of the overlapping district's assessed property value that is within the boundaries of the district divided by the overlapping district's total taxable assessed value. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations. Ratios to Assessed Valuation: Direct Debt 0.00% Total Direct and Overlapping Tax and Assessment Debt 1.21% Combined Total Debt 1.47% Source: California Municipal Statistics, Inc. 70

95 San Diego County Demographic and Economic Statistics (1) Last Ten Fiscal Years Year Population Personal Income (in thousands) Per Capita Personal Income (in dollars) School Enrollment Unemployment Rate ,227,496 $ 179,800,000 $ 55, , % ,194, ,300,000 53, , % ,150, ,600,000 49, , % ,128, ,500,000 49, , % ,115, ,539,000 48, , % ,224, ,525,000 42, , % ,185, ,696,000 42, , % ,146, ,873,000 45, , % ,974, ,369,000 44, , % ,948, ,194,000 42, , % Source: County of San Diego, Comprehensive Annual Financial Report for the Year Ended June 30, Notes: (1) San Diego County, while not an exact representation of the District, is used to obtain the Demographic and Economic data shown above. There is no exact data available for the Pauma Valley area. 71

96 San Diego County Employment by Industry (1) Fiscal Year 2015 and 2006 Employment at June Employment % of Total at Employment June 2005 % of Total Employment Agriculture 10,900 1% 11,300 1% Natural Resources & Mining 400 0% 500 0% Construction 67,300 5% 95,100 7% Manufacturing 98,800 7% 104,800 8% Wholesale Trade 46,200 3% 45,400 3% Retail Trade 145,200 10% 146,100 11% Transportation Warehousing & Utilities 26,500 2% 28,700 2% Information 25,200 2% 31,600 2% Finance Activities 72,200 5% 84,500 6% Professional & Business Services 239,400 17% 221,100 17% Educational & Health Services 193,700 14% 134,900 10% Leisure & Hospitality 186,100 13% 159,400 12% Other Services Repair, Religious, Professional 52,100 4% 49,400 4% Federal Government 45,700 3% 40,400 3% State Government 46,500 3% 39,800 3% Local Government 146,700 10% 141,000 11% Total, All Industries 1,402, % 1,334, % Civilian Employment 1,487, % 1,431, % Civilian Unemployment 77, % 61, % Total Civilian Labor Force 1,565, % 1,493, % Civilian Unemployment Rate 5.0% 4.1% Source: California Employment Development Department Notes: (1) San Diego County, while not an exact representation of the District, is used to obtain the employment profile data shown above. There is no exact data available for the Pauma Valley area. 72

97 San Diego County Principal Employers (1) Current Year and Nine Years Ago Employees Rank Percentage of Total County Employment Employees Rank Percentage of Total County Employment University of California, San Diego 29, % 27, % County of San Diego 17, % 16, % Sharp HealthCare 16, % 13, % Scripps Health 14, % 10, % Qualcomm Inc. 13, % Kaiser Permanente 7, % 7, % UC San Diego Health System 7, % YMCA of San Diego County 5, % Rady Children's Hospital - San Diego 5, % General Atomics (and affiliated companies) 5, % Federal Government 39, % State of California 38, % San Diego Unified School District 19, % City of San Diego 11, % U.S. Postal Service, San Diego District 6, % Total 121, % 192, % Source: County of San Diego, Comprehensive Annual Financial Report for the Year Ended June 30, Notes: (1) San Diego County, while not an exact representation of the District, is used to obtain the employment profile data shown above. There is no exact data available for the Pauma Valley area. However, the casinos, container nurseries, and schools are the largest employers in our area. 73

98 District Employees and Operational Information (1) Last Ten Fiscal Years District Employees Fiscal Average Year Field Administrative Total Years Ended Management Operations Services Employees (2) of Service (3) Operational Information Water System - Yuima & IDA Combined Service Area 13,460 acres Miles of Water Main miles Number of Ag Only Open Reservoirs 2 Number of Treated Water Tanks 10 Total Treated Storage Capacity 58.0 ac.ft. Number of Booster Pump Stations 9 Booster Station Total Connected Horsepower.. 4,850hp Number of Producing Wells 27 Daily Production Peak (4) 8.4 mgd Average Daily Production (4) 2.2 mgd Number of Service Connections 330 Source: Notes: Yuima Municipal Water District (1) Yuima is an established water district which is reflected in the relatively small changes in employees over this ten year period. (2) The employee count represents the number of full time employees in each department. (3) Peak and average daily productions based on imported and local water supplies for the first 10 months of the calendar year. (4) Peak and average daily productions based on imported and local water supplies for the first 10 months of the calendar year. 74

99 Capital Assets Last Ten Years Page 1 of 2 Yuima & IDA Combined Fiscal Water Year Annexation Source Pumping Treatment Ended Fees Land of Supply Plant Plant 2015 $ 944,872 $ 356,585 $ 8,997,463 $ 3,529,008 $ 147, , ,835 8,679,135 3,487, , , ,835 6,910,384 3,137, , , ,835 6,794,878 3,102, , , ,835 6,632,141 3,005, , , ,835 6,272,088 2,912, , , ,835 6,272,088 2,917, , , ,835 4,784,991 1,902, , , ,835 4,623,944 1,854, , , ,835 4,130,665 1,798, ,315 Capital Assets 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Fiscal Year Net Capital Assets Construction in Progress Source: Yuima Municipal Water District Notes: The Fire Protection function has no related capital assets, since such activity is outsourced to the CalFIRE. 75

100 Capital Assets Last Ten Years Page 2 of 2 Yuima & IDA Combined Fiscal Year Transmission General Accumulated Net Capital Construction Ended & Distribution Plant Depreciation Assets in Progress 2015 $ 8,068,930 $ 1,735,080 $ (9,561,627) 14,218,030 $ ,070,469 1,628,177 (9,119,567) 14,190,721 89, ,771,580 1,672,021 (8,668,465) 12,298, , ,771,580 1,596,053 (8,124,617) 12,594,236 87, ,366,146 1,566,928 (7,673,180) 12,323,798 59, ,027,345 1,529,078 (7,207,478) 11,947,824 51, ,974,608 1,515,329 (6,804,249) 12,289,930 1,763, ,641,385 1,529,585 (6,555,544) 9,744,542 2,053, ,639,470 1,475,628 (6,220,083) 9,815, , ,565,232 1,372,870 (5,865,848) 9,413, ,063 76

101 Operating & Capital Indicators Last Ten Fiscal Years Page 1 of 2 Service Area Total Rainfall (inches) Fiscal Year ,460 13,460 13,460 13,460 13, Miles of Water Main (6"+) Number of Treated Water Tanks Capacity of Water Tanks (acre feet) Number of Open Reservoirs Capacity of Open Reservoirs (acre feet) Number of Ag Only Open Reservoirs Capacity of Ag Only Open Reservoirs (acre feet) Number of Producing Wells Maximum gallons per minute Flows (1) 2,901 3,577 3,240 3,090 3,130 Number of Pump Stations Number of Pumps Pump Capacity (horsepower) 4,850 4,785 4,820 4,930 4,930 Number of Service Connections (2) Production Peak (mgd) (3)(4) Average Annual Production (mgd) Number of Mainline Repairs Source: Yuima Municipal Water District Notes: (1) Yuima and IDA local wells production including leased wells. (2) Yuima connections = 101; IDA connections = 229 (3) Peak production month - September (4) Local and imported water supplies. 77

102 Operating & Capital Indicators Last Ten Fiscal Years Page 2 of 2 Fiscal Year Service Area 13,460 13,460 13,460 13,460 13,460 Total Rainfall (inches) Miles of Water Main (8"+) Number of Treated Water Tanks Capacity of Water Tanks (acre feet) Number of Open Reservoirs Capacity of Open Reservoirs (acre feet) Number of Ag Only Open Reservoirs Capacity of Ag Only Open Reservoirs (acre feet) Number of Producing Wells Maximum gallons per minute Flows 3,130 3,130 2,650 2,650 2,650 Number of Pump Stations Number of Pumps Pump Capacity (horsepower) 4,930 4,480 3,955 3,850 3,850 Number of Service Connections Production Peak (mgd) Average Production (mgd) Number of Mainline Repairs Source: Yuima Municipal Water District 78

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